UC-NRLF 


SB    31    131 


«"<&** 


REPORT 


ON  THE 


CHICAGO  DOCK  PROBLEM 

With  Special  Reference  to 
the  Questions  of  Municipal 
Ownership  and  Leasing  Policy 


PREPARED  FOR 

JOHN  M.  EWEN,  Chicago  Harbor  Commissioner 

BY 

GEORGE  C.  SIKES 


OF    (HE 

UNIVERSITY 

OF 


CONTENTS. 


PAGE. 

Letter  of  Transmittal 4 

Summary  and  Conclusions 5 

Text  of  Report— 

I.     As  to  Municipal  Ownership  of  Dock  Facilities .     10 

II.     Leasing  Policy 50 

III.  The  Importance  to  Chicago  of  the  Passenger, 
Fruit,  Vegetable  and  Package  Freight  Busi- 
ness    62 

Appendix  A — Extract  from  Report  of  the  Street  Rail- 
way Commission  to  the  City  Council  of  Chicago, 
December,  1900,  entitled,  "Public  Control  and 
Duration  of  Grants" 68 

Appendix  B — Extracts  from  the  Report  of  the  Metro- 
politan Improvements  Commission,  created  by  act 
of  the  Massachusetts  Legislature  to  Study  the 
Boston  Situation ,..,..,. , . . ,  76 


251781; 


LETTER   OF   TRANSMITTAL, 


MR.  JOHN  M.  EWEN, 

Chicago  Harbor  Commissioner. 

Dear  Sir : 

Pursuant  to  your  directions  I  have  prepared  and  submit  here- 
with a  report  dealing  with  certain  phases  of  the  Chicago  dock 
problem,  especially  municipal  ownership  and  leasing  policy,  to 
which  you  suggested  that  I  should  give  special  attention. 

In  preparing  the  report  I  have  utilized  such  printed  material 
as  was  available  and  have  visited  in  person  many  of  the  ports 
mentioned.  For  facts  relating  to  the  European  situation  I  have 
drawn  chiefly  upon  the  information  procured  for  the  Chicago 
Harbor  Commission  by  Professor  Goode. 

Respectfully   submitted, 

GEORGE  C.  SIKES. 
Chicago,  October,  1909. 


SUMMARY  AND  CONCLUSIONS. 


In  view  of  the  popular  controversy  that  has  raged  in  Chicago 
over  some  phases  of  the  municipal  ownership  question,  it  is  well 
to  draw  certain  distinctions.  Both  public  sentiment  and  expert 
opinion  are  divided  as  to  the  wisdom  of  public  ownership  and 
operaton  of  such  utilities  as  street  railways,  lighting  plants  and 
telephone  systems.  With  water  works  systems,  however,  to  take 
another  example,  the  case  is  quite  different.  It  is  generally  con- 
ceded that  plants  for  furnishing  city  water  should  be  publicly 
owned  and  the  tendency  is  in  the  direction  of  the  municipaliza- 
tion  of  this  utility. 

II. 

With  respect  to  public  ownership,  docks  properly  belong  in 
the  same  category  as  water  works  and  not  in  the  class  of  utili- 
ties like  street  railway,  lighting  and  telephone  plants  that  are 
the  subject  of  controversy  in  this  regard.  Experience,  the  trend 
of  events,  and  the  best  official  and  expert  opinion  on  the  subject 
substantially  all  lead  to  the  same  conclusion — that  the  wisest 
ultimate  policy  with  regard  to  what  are  commonly  known  as 
commercial  dock  facilities,  such  as  it  is  intended  to  provide 
north  of  the  mouth  of  the  Chicago  river,  is  public  ownership. 
Whether  the  docks  shall  be  constructed  and  owned  by  the  city 
from  the  outset,  or  whether  a  private  corporation  shall  be  used 
as  the  agency  for  providing  them  in  first  instance,  under  condi- 
tions that  shall  admit  of  their  later  acquisition  by  the  municipal- 
ity, is  a  question  of  business  judgment  to  be  decided  according 
to  the  concrete  situation  in  any  particular  case. 


m. 

The  principal  ports  of  Europe  are  either  publicly  owned  or 
are  managed  by  harbor  trusts  on  lines  that  bear  much  more  sim- 
ilarity to  public  than  to  private  ownership.  New  York  has  muni- 
cipal ownership  of  docks.  The  ports  of  New  Orleans  and  San 
Francisco  have  public  ownership  and  management  by  state  com- 
missions. Montreal,  the  chief  port  of  Canada,  has  public  own- 
ership and  management  by  a  Dominion  commission.  Boston  and 
Philadelphia  have  chiefly  railroad  and  private  ownership.  Bal- 
timore, with  railroad  and  private  ownership,  is  inaugurating  a 
program  of  municipal  ownership.  Galveston  presents  the  most 
creditable  example  of  development  under  private  ownership  to 
be  found  in  this  country,  largely  because  the  development,  while 
private,  is  on  the  basis  of  unity.  Los  Angeles  has  extended  its 
city  limits  to  the  ocean  and  is  planning  to  make  extensive  dock 
developments  on  the  basis  of  municipal  ownership.  Oakland, 
also,  has  plans  for  extensive  developments  on  the  basis  of  munic- 
ipal ownership.  Seattle  and  Tacoma  in  Washington  and  Port- 
land in  Oregon  have  mixed  railroad  and  private  ownership.  The 
principal  owner  of  water  front  property  in  Vancouver,  British 
Columbia,  adapted  to  shipping  purposes,  is  the  Canadian  Pacific 
Railroad.  The  lake  ports  usually  have  a  combination  of  railroad 
and  private  ownership. 

IV. 

Unity  and  development  according  to  a  comprehensive  plan, 
offering  adequate  facilities  for  all  applicants  on  fair  terms, 
are  the  chief  essentials  to  a  well-ordered  port.  This  comprehen- 
sive plan  should  take  account  of  rail  as  well  as  water  terminals. 
No  one  with  faith  in  the  future  water  commerce  of  Chicago  can 
believe  that  the  docks  which  it  is  proposed  to  provide  north  of 
the  mouth  of  the  Chicago  river  will  prove  adequate  for  future 
needs.  It  will  be  necessary  some  time  to  provide  additional  fa- 
cilities in  some  other  part  of  the  city.  Where,  it  is  difficult  to 
say  at  this  time.  The  problem  calls  for  further  study,  separately 
and  in  connection  with  the  railway  terminal  problem  and  the 
proposed  Lakes-to-the-Gulf  waterway.  It  would  seem  that  the 


city  should  make  provision  for  a  thorough-going  study  by  ex- 
perts of  Chicago's  railroad  terminal  problem.  It  would  seem 
also  that  the  General  Assembly  of  Illinois  in  connection  with 
proposed  legislation  for  the  spending  of  $20,000,000  to  promote 
waterway  development,  should  order  an  inquiry  as  to  what  the 
connecting  channel  into  Lake  Michigan  is  to  be.  The  present 
Chicago  river  cannot  be  considered  satisfactory  for  that  pur- 
pose. Without  proper  dock  terminals  Avith  railroad  connections 
and  transshipping  facilities,  open  on  fair  terms  to  competitive 
commerce,  the  Lakes-to-the-Gulf  Deep  Waterway  would  fail  to 
accomplish  much  that  is  expected  of  it. 

V. 

There  is  little  in  the  experience  of  other  ports  to  guide  Chi- 
cago with  reference  to  the  proper  terms  to  be  incorporated  into 
a  franchise  grant,  in  case  it  should  be  decided  to  promote  dock 
development  in  first  instance  on  the  basis  of  private  ownership. 
More  light  may  be  gained  on  this  subject  by  an  examination  of 
Chicago's  own  experience  with  other  public  utilities,  especially 
the  street  railways,  than  is  to  be  secured  from  a  study  of  ports 
elsewhere.  The  main  features  of  Chicago's  franchise  policy  as 
worked  out  in  the  traction  settlement  ordinances  are:  (1)  The 
reservation  to  the  city  of  the  right  to  terminate  the  grant  at  any 
time  for  purchase  by  the  city  or  by  a  licensee  corporation;  (2) 
the  effort  to  eliminate  speculative  profits:  (3)  full  publicity  of  the 
affairs  of  the  grantee  corporation ;  (4)  controlling  participation 
by  the  city  in  the  planning  and  execution  of  the  work  of  recon- 
struction. Of  these  four  features  the  first  named  is  the  most 
vital,  although  all  are  important  and  would  seem  to  be  applicable 
to  the  dock  situation.  The  problem  of  proper  dock  develop- 
ments in  this  community  presents  many  difficulties,  complexities 
and  uncertainties,  and  is  closely  related  to  other  unsolved  prob- 
lems, especially  that  of  proper  rearrangement  of  railroad  term- 
inals. An  era  of  reconstruction  and  of  tremendous  improvement 
is  believed  to  be  directly  ahead  for  Chicago.  Nothing  should  be 
done  that  cannot  be  made  to  fit  into  whatever  larger  plan  may 
be  worked  out.  No  rights  should  be  created  that  will  stand  as  a 


bar  to  later  unity.  If  the  docks  under  discussion  are  to  be  built 
and  owned  by  a  private  corporation,  it  should  be  only  on  condi- 
tion that  the  owners  stand  ready  to  sell  at  any  time  to  the  city 
or  to  another  licensee  corporation,  thus  making  it  possible  to 
correlate  the  docks  with  other  related  undertakings,  whenever 
plans  for  development  on  a  harmonious  scale  may  be  worked  out. 

VI. 

The  various  arrangements  under  which  boats  are  permitted 
to  use  dock  facilities  may  be  divided  into  three  main  classifica- 
tions :  First,  there  is  the  leasing  system,  as  practiced  in  New 
York  City,  under  which  boat  lines  make  definite  leases  of  dock 
space  for  fixed  periods  and  during  the  life  of  the  lease  have  the 
exclusive  control  of  the  particular  dock  space  specified.  Then 
there  is  the  New  Orleans  system  under  which  the  charges  are 
based  on  the  tonnage  capacity  of  the  vessel,  without  regard  to 
the  quantity  of  goods  moved  over  the  wharf.  New  Orleans 
makes  no  charge  whatever  against  the  goods,  but  collects  its 
entire  revenue  from  the  ship  owner.  Galveston  and  Montreal 
furnish  examples  of  the  third  system,  under  which  no  charge  is 
levied  against  the  vessel,  but  the  entire  revenues  are  raised  by  a 
schedule  of  dues  on  the  commodities  moved  over  the  wharf. 
Some  ports  have  a  combination  of  two  or  more  of  these  systems. 
In  San  Francisco,  for  example,  there  is  a  charge  both  on  vessel 
and  goods.  In  addition  to  the  three  types  of  charges  above  men- 
tioned, there  is  usually  a  special  charge  for  the  use  of  sheds, 
either  in  the  form  of  sheddage  dues  or  of  fixed  rental  for  the 
use  of  shed  facilities.  The  storage  charges  on  goods  left  on  the 
pier  longer  than  specified  periods  of  time  is  in  its  nature  akin 
to  the  storage  charge  imposed  by  warehouse  concerns.  Chicago 
probably  would  adopt  the  pier  leasing  system,  as  distinguished 
from  the  plan  for  dockage  or  wharfage  dues,  as  that  system  is 
the  simplest  and  is  the  one  with  which  the  shipping  interests  of 
the  Great  Lakes  are  most  familiar.  It  should  be  the  policy,  how- 
ever, to  have  at  all  times  sufficient  unleased  pier  space  at  which 
occasional  boats  may  load  and  unload.  For  the  use  of  such 
piers  it  would  be  most  convenient,  perhaps,  to  provide  a  sched- 


ule  of  wharfage  dues,  after  the  manner  of  Galveston  and  Mon- 
treal, imposing  a  charge  of  so  much  a  ton  on  goods  moved  over 
the  pier.  For  passenger  boats  not  having  regular  leased  pier 
space,  it  would  be  necessary  to  devise  a  system  of  charges^based 
probably  on  the  size  of  the  boat.  It  is  of  the  utmost  importance 
that  the  principle  be  adopted  that  all  pier  leases  or  assignments 
of  dock  space  be  subject  to  revocation  on  short  notice.  Possibly 
at  the  outset  in  Chicago  it  might  be  expedient  to  compromise  and 
provide  that  leases  should  have  ten  years  of  definite  duration 
and  after  that  be  subject  to  revocation  at  will.  Whatever  leas- 
ing policy  the  city  may  deem  wise  for  itself  it  would  naturally 
expect  a  corporation  developing  docks  under  a  franchise  ar- 
rangement to  follow.  If  rights  of  shippers  and  vesselmen  are  to 
be  safeguarded  under  a  system  of  private  ownership  of  docks, 
provision  must  be  made  for  continuing  public  control  of  dock 
management,  including  supervision  of  all  leasing  arrangements. 

VII. 

The  importance  to  Chicago  of  the  passenger,  package  freight 
and  fruit  and  vegetable  business  has  been  underestimated  here- 
tofore. The  welfare  of  the  city  requires  that  better  provision 
be  made  for  the  accommodation  of  such  business. 


I. 


AS  TO  MUNICIPAL  OWNERSHIP  OF  DOCK 
FACILITIES. 


In  view  of  the  popular  controversy  that  has  raged  in  Chi- 
cago over  some  phases  of  the  municipal  ownership  question,  it 
is  well  to  draw  certain  distinctions. 

Both  public  sentiment  and  expert  opinion  are  divided  as  to 
the  wisdom  of  public  ownership  and  operation  of  such  utilities 
as  street  railways,  lighting  plants  and  telephone  systems.  With 
water-works  systems,  however,  to  take  another  example,  the  case 
is  quite  different. 

It  is  generally  conceded  that  plants  for  furnishing  city  water 
should  be  publicly  owned  and  the  tendency  is  in  the  direction 
of  the  municipalization  of  this  utility.  One  reason  for  the  public 
ownership  of  water  plants  is  that  the  water  supply  bears  an  in- 
timate relation  to  the  health  of  a  community.  Another  is  that 
water  plants  call  for  large  capital  outlay,  but  require  a  very 
small  operating  force  as  compared  with  such  utilities  as  street 
railways  and  lighting  and  telephone  plants.  The  city  can  effect 
economies  by  borrowing  money  at  lower  rates  of  interest  than 
can  a  private  corporation,  while  the  management  of  a  water 
system  does  not  present  serious  complexities  or  the  patronage 
dangers  inherent  in  the  employment  of  a  large  operating  force. 
Of  the  sixteen  water-works  plants  existing  in  the  United  States 
in  1800,  but  one  was  municipally  owned.  In  1906,  nearly  60  per 
cent,  of  the  water-works  plants  were  municipal  property.  During 
the  past  century  205  plants  were  changed  from  private  to  mun- 
icipal ownership,  while  only  twenty  changed  from  public  to 
private.  Of  the  thirteen  largest  cities  in  the  United  States,  all 
but  one — San  Francisco — own  their  water-works  and  San  Fran- 

11 


cisco  is  clamoring  for  a  change.  Of  the  thirty-eight  cities  with 
a  population  of  100,000  or  over  in  1900,  all  but  eight  own  their 
water  plants. 

With  respect  to  public  ownership,  docks  properly  belong  in 
the  same  category  as  water-works  and  not  in  the  class  of  utili- 
ties like  street  railway,  lighting  and  telephone  plants  that  are 
the  subject  of  controversy  in  this  regard.  Docks,  to  be  sure, 
do  not  bear  the  relation  to  public  health  that  the  water  system 
does,  but  docks  do  affect  in  a  peculiarly  vital  manner  the  com- 
mercial life  of  the  community.  They  involve  ultimately,  if  not 
immediately,  large  capital  outlay,  with  an  operating  force 
smaller  even  than  is  required  for  the  management  of  a  water 
plant. 

Experience,  the  trend  of  events,  and  the  best  official  and  ex- 
pert opinion  on  the  subject  substantially  all  lead  to  the  same 
conclusion — that  the  wisest  ultimate  policy  with  reference  to 
what  are  known  as  commercial  dock  facilities,  such  as  it  is  in- 
tended to  provide  north  of  the  mouth  of  the  Chicago  river,  is 
public  ownership.  "Whether  the  docks  shall  be  constructed  and 
owned  by  the  city  from  the  outset,  or  whether  a  private  cor- 
poration shall  be  used  as  the  agency  for  providing  them  in  first 
instance,  under  conditions  that  shall  admit  of  their  later  acqui- 
sition by  the  municipality,  is  a  question  of  business  judgment 
to  be  decided  according  to  the  concrete  situation  presented  in 
any  particular  case. 

Types  of  Ownership. 

According  to  types  of  ownership,  docks  may  be  divided  into 
five  main  classes,  as  follows : 

1.  Public  ownership,  including  both  state  and  city  owner- 
ship. 

2.  The  harbor  trust. 

3.  Railroad  ownership. 

4.  Ownership  by  private  corporations  or  individuals  not  en- 
gaged in  the  transportation  business,  either  rail  or  water,  which 
permit  shipping  companies  to  use  the  facilities  either  under  a 
leasing  arrangement  or  on  the  payment  of  wharfage. 

12 


5.  Ownership  by  the  boat  line  which  maintains  and  operates 
the  dock  facilities  primarily  for  its  own  use. 

The  foregoing  classification  relates  to  what  are  characterized 
as  commercial  docks.  I  have  not  undertaken  to  deal  in-this  re- 
port with  industrial  harbor  facilities,  that  is,  with  manufactur- 
ing locations  on  navigable  waters  especially  equipped  for  bring- 
ing in  raw  materials  of  manufacture  and  taking  out  finished 
products  by  boat. 

The  principal  ports  of  Europe  are  either  publicly  owned  or 
are  managed  by  harbor  trusts  on  lines  that  bear  much  more 
similarity  to  public  than  to  private  ownership.  The  most  con- 
spicuous exception  to  the  prevailing  rule  in  Europe  has  been 
London,  but  even  the  management  of  that  port  has  recently 
been  turned  over  to  a  harbor  trust  created  by  special  act  of 
Parliament.  Private  management  of  dock  facilities  in  London 
was  found  to  be  productive  of  high  charges  and  in  other  ways 
inconsistent  with  the  most  progressive  development  of  the 
world's  metropolis.  After  a  most  exhaustive  inquiry  by  a  royal 
commission  the  change  of  policy  was  recommended  and  Parlia- 
ment authorized  a  harbor  trust  to  take  over,  improve  and  man- 
age the  dock  facilities  of  London,  the  price  of  the  properties 
acquired  being  about  $200,000,000.  Professor  Goode,  in  his  re- 
port to  the  Chicago  Harbor  Commission  (page  105),  concludes 
his  account  of  the  transfer  of  the  London  dock  facilities  from 
private  ownership  to  the  harbor  trust  with  this  comment : ' 

"It  is  most  significant  for  us  in  Chicago  that  the  best  brains  in  Britain, 
after  years  of  exhaustive  study,  have  adopted  the  policy  of  having  one 
powerful  independent  monopoly  in  charge  of  the  business  of  the  port.  Pri- 
vate interests  disappear,  and  the  affairs  of  the  port  are  to  be  managed  as 
one  estate  in  the  interest  of  all  the  people  doing  business  in  the  port;  and 
with  the  intention  not  of  paying  the  largest  dividend  possible,  but  of  giv- 
ing the  best  possible  service,  and  paying  an  interest  of  only  about  3  per 
cent,  on  the  actual  capital  investment." 

The  favorite  type  of  port  management  in  Great  Britain  is 
that  of  the  harbor  trust;  in  continental  Europe  direct  public 
ownership  is  usual.  Liverpool,  Glasgow  and  the  Tyne  ports,  in 
addition  to  London,  have  the  harbor  trust.  The  Manchester 
canal  project  was  undertaken  by  a  private  corporation  actuated 

13 


by  much  the  same  public  spirit  as  a  harbor  trust.  In  return  for 
municipal  aid  in  the  form  of  extensive  loans,  the  city  was  given 
a  majority  of  the  membership  of  the  board  of  directors,  thus 
making  the  control  dominantly,  though  indirectly,  municipal 
When  the  debt  is  repaid  the  city's  representation  on  the  direc- 
torate will  be  reduced.  Bristol  is  a  port  under  municipal  man- 
agement. In  Southampton  the  docks  are  owned  and  operated 
by  the  London  and  Southwestern  railway.  Cardiff  offers  an 
instance  of  private  ownership.  The  Marquis  of  Bute,  owner 
of  extensive  coal  lands  back  of  Cardiff,  found  it  necessary  to 
develop  a  harbor  as  a  means  of  providing  facilities  for  shipping 
his  coal.  The  port  of  Havre  in  France  is  subject  to  both  na- 
tional and  municipal  control.  The  divided  authority,  although 
all  public,  is  the  cause  of  confusion  and  delay  and  interferes 
much  with  efficiency  of  management.  The  Belgian  port  of  Ant- 
werp is  a  municipal  monopoly,  controlled  directly  by  the  city 
council.  Rotterdam,  Holland's  great  port,  is  also  under  munic- 
ipal ownership.  Hamburg  offers  a  case  of  state  ownership,  but 
the  state  of  Hamburg  comprehends  little  beside  the  city,  so  that 
it  is  in  practical  effect  municipal  ownership. 

Mixed  Ownership  in  Marseilles. 

Marseilles,  France,  is  a  port  with  mixed  ownership — public 
and  private.  The  beginning  of  Marseilles  as  a  large  seaport 
dates-  from  1856,  when  a  company  was  given  a  concession  for 
the  development  of  facilities  on  the  basis  of  private  ownership. 
A  United  States  consular  report  of  1895,  published  in  the  report 
on  "Docks  and  Terminal  Facilities "  by  the  Massachusetts  Com- 
mission in  1897,  gives  the  following  description  of  the  situation 
in  Marseilles  at  that  time : 

"In  1872,  when  the  business  of  this  port  was  practically  in  the  hands 
and  under  the  control  of  the  private  company  of  the  docks  and  entrepots, 
the  commerce  had  reached  such  proportions  that  the  docks  and  wharves 
were  altogether  insufficient  for  the  requirements  of  trade,  and  reclamations 
for  delay  and  damage  became  numerous  and  frequent,  and  were  generally 
unheeded.  The  private  company,  intrenched  in  its  monopoly,  continued  to 
impose  its  full  tariffs,  and  refused  any  enlargement  of  its  facilities.  To  re- 
lieve this  congested  and  paralyzing  condition,  new  docks  were  authorized 
by  national  legislation  in  1874,  were  begun  in  1875  and  completed  in  part 

14 


in  1881.  Public  sentiment  demanded  in  strong  and  vigorous  tones  the  con- 
struction of  new  docks,  and  that  they  should  be  owned  and  controlled  by  the 
public  authorities  as  a  security  and  protection  for  all  time  against  the 
monopoly  and  exactions  of  private  companies.  Free  labor  and  free~quays 
was  the  battlecry  of  the  agitation.  Litigation  arose;  the  private  com- 
pany of  the  docks  and  entrepots  claimed  an  exclusive  concession  from  the 
State.  The  courts  decided  against  the  contention  of  the  private  company, 
and  the  new  national  docks  were  undertaken,  completed  and  are  now  con- 
trolled by  the  Marseilles  Chamber  of  Commerce.  The  competition  be- 
tween the  public  and  private  companies  has  been  most  beneficial.  It  has 
stimulated  improvements  and  multiplied  facilities,  while  the  port  charges 
have  decreased  more  than  eight  per  cent,  in  five  years." 

The  report  by  President  Stephens  and  Chief  Engineer  Cowie 
of  the  Montreal  Harbor  Commissioners,  made  in  1908,  after  a 
tour  of  inspection  of  European  ports,  found  the  divided  man- 
agement in  Marseilles  a  barrier  to  progress.  I  take  the  follow- 
ing from  their  " General  Impressions '?  of  the  port  of  Marseilles: 

"DIFFERENCES  OF  OPINION.— Lack  of  harmony  between  the  differ- 
ent port  interests  was  in  evidence,  and  general  dissatisfaction  appeared  to 
exist  as  to  the  progress  of  the  Port. 

"AUTHORITIES. — The  disadvantages  were  apparent  of  having  three 
authorities  and  at  least  two  administrative  systems  in  the  Port,  viz.: — 

"The  Government. 

' i  The  Chambre  de  Commerce. 

"The  Cie.  des  Docks  et  Entrepots. 

' '  The  visible  results  of  some  features  of  policy  with  regard  to  harbour 
development  and  administration,  may  be  seen  by  the  transfer  of  business 
which  formerly  was  done  at  Maseille  to  Genoa,  showing  that  even  with 
Government  support  and  a  splendid  natural  situation,  a  port  may  be  dis- 
tanced by  foreign  competitors." 

New  York's  Municipal  Dock  System. 

New  York,  New  Orleans  and  San  Francisco,  in  this  country, 
have  publicly  owned  docks,  as  has  also  Montreal,  the  chief  port 
of  Canada. 

New  York's  municipal  dock  system  dates  from  1870,  when 
the  law  creating  the  department  of  docks  of  the  city  was  passed 
by  the  state  legislature.  By  its  early  charters  New  York  city 
had  been  granted  the  title  to  most  of  the  land  under  water  bor- 
dering upon  Manhattan  island.  Gradually,  through  transfer  of 

15 


rights  to  private  parties,  the  city  lost  control  of  the  greater  part 
of  its  water  front.  The  wharves  in  the  main  were  privately 
owned.  There  was  no  orderly  development.  Facilities  were 
poor  and  charges  high.  In  the  decade  prior  to  1870,  especially, 
complaint  against  the  inadequacy  of  facilities  was  voiced  in  offi- 
cial reports  and  in  the  press.  A  private  corporation  sought  the 
right  to  take  over,  under  a  fifty  year  lease,  what  city  piers  were 
still  left  and  to  acquire  and  improve  others.  An  organization 
known  as  the  Citizens'  Association  supported  a  bill  for  the  crea- 
tion of  a  harbor  trust  to  take  charge  of  the  docks  of  New  York 
and  Brooklyn.  Neither  of  these  propositions  was  received  with 
favor.  Mayor  Hoffman,  in  a  message  to  the  council  in  1868, 
expressed  the  opinion  that  the  city  wharves  and  piers  had  never 
been  properly  valued.  He  thought  them  worth  $10,000,000  at 
that  time.  He  favored  putting  the  docks  in  charge  of  a  com- 
mission composed  of  three  members  appointed  by  the  mayor  and 
of  the  sinking  fund  commissioners.  The  law  enacted  two  years 
later  embodied  a  modification  of  this  suggestion.  Tweed,  who 
was  then  in  the  height  of  his  power,  aided  the  passage  of  the 
law  and  undoubtedly  intended  to  utilize  it  for  purposes  of 
plunder.  The  exposure  came  too  soon,  however,  to  permit 
Tweed  to  profit  from  manipulation  of  the  dock  department.  Ac- 
cording to  the  provisions  of  the  law,  all  the  expenditures  of  the 
dock  department,  current  as  well  as  capital,  were  to  be  met 
out  of  bond  issues  which  the  dock  commissioners  were  to  issue, 
and  spend  the  proceeds  thereof,  without  the -approval  or  super- 
vision of  the  legislative  branch  of  the  city  government.  Even 
to  this  day  the  policy  of  meeting  all  expenditures  out  of  bond 
issues  is  continued,  the  receipts  in  turn  all  being  turned  into  the 
sinking  fund.  The  receipts  of  the  dock  department  since  its 
creation  have,  as  a  matter  of  fact,  exceeded  its  expenditures. 

The  dock  department  is  operating  municipal  ferries  at 
a  loss  and  using  the  proceeds  of  bond  issues  to  pay 
the  deficit.  A  loss  on  the  municipal  ferries  was  expected, 
but  it  is  a  very  difficult  matter  for  the  ordinary  citizen  to  learn 
from  the  published  accounts  what  the  loss  is.  The  method  of 
financing  the  dock  department  is  unsound  and  its  system  of  ac- 
counts and  publicity  is  faulty.  The  feature  of  dock  department 

16 


management  calling  for  the  most  serious  criticism,  that  of  leas- 
ing policy,  is  considered  in  the  second  division  of  this  report. 
The  taking  over  of  the  operation  of  the  ferries  has  added  diffi- 
culties and  causes  of  criticism  that  would  not  apply  to  4he  man- 
agement of  the  docks  as  distinguished  from  the  ferries.  The 
management  of  the  dock  department  has  been  criticized  from 
time  to  come,  in  official  reports  and  otherwise.  Yet  nowhere 
have  I  seen  it  seriously  suggested  that  the  policy  of  public 
ownership  of  docks  in  New  York  was  a  mistake.  On  the  con- 
trary, the  system  of  public  docks  is  commonly  assigned  as  one 
reason  for  the  remarkable  commercial  development  of  New  York 
City.  With  political  conditions  as  they  have  been  in  New  York 
for  the  past  forty  years,  perfection  in  the  dock  department  was 
not  to  be  looked  for.  On  the  whole,  the  management  of  the 
dock  department  seems  to  have  been  considerably  better  than 
might  have  been  expected  under  the  circumstances.  On  the 
physical  side  •  the  development  has  been  especially  creditable. 
Immediately  after  the  organization  of  the  department,  an  or- 
derly plan  of  development  was  formulated  and  in  the  main  has 
been  adhered  to.  Water  front  rights  have  been  acquired  until 
now  the  city  owns  about  three-fourths  of  the  water  front  of 
Manhattan  island.  The  piers  and  the  sheds,  especially  the  newer 
ones,  are  both  substantial  and  elegant  in  construction.  The  use 
of  car  floats  in  the  harbor  of  New  York  is  very  extensive.  The 
dockage  in  Brooklyn  and  on  the  Jersey  shore  is  mostly  under 
private  or  railroad  ownership.  The  privately-owned  docks  of 
the  Hamburg-American  and  North  German  Lloyd  lines  are  in 
Hoboken,  on  the  Jersey  side  of  the  river.  The  ability  of  these 
powerful  companies  to  provide  themselves  with  good  dock  facili- 
ties does  not  give  them  the  advantage  over  weaker  companies 
in  the  port  of  New  York  that  they  might  possess  were  it  not 
for  the  dockage  accommodations  furnished  by  the  city.  Since 
the  merging  of  Brooklyn  into  Greater  New  York  there  has  been 
a  movement  to  bring  some  of  the  Brooklyn  shore  under  city 
ownership. 

A  most  interesting  private  undertaking  is  that  of  the  Bush 
Terminal  Company  in  South  Brooklyn.  This  company  owns 
considerable  water  frontage,  projecting  from  which  it  has  built 

17 


several  extensive  piers.  In  part  these  piers  are  utilized  by 
boat  lines,  but  industrial  features  have  been  made  prominent. 
Back  of  the  piers  are  warehouses  used  for  general  storage  pur- 
poses. There  are  also  several  buildings  designed  especially  for 
factory  purposes.  These  buidlings  are  several  stories  high.  Floors 
or  parts  of  floors  are  leased  to  manufacturing  concerns.  The 
Bush  Terminal  Company  operates  a  terminal  railroad  with 
tracks  connecting  the  piers,  warehouses,  and  manufacturing 
buildings.  Raw  materials  or  other  supplies  for  the  tenants  of 
the  manufacturing  buildings  are  landed  by  boats  or  car  floats 
at  the  Bush  docks.  The  Bush  Terminal  Company  makes  de- 
liveries from  its  receiving  docks  directly  to  the  floor  of  the 
manufacturer  by  means  of  its  terminal  railroad  and  the  elevator 
service  in  the  building.  The  finished  products  of  the  manufac- 
turing plants  are  sent  out  in  the  same  way. 

I  call  attention  to  this  matter  as  something  that  may  be 
deserving  of  study  when  the  time  comes  for  developing  further 
industrial  harbor  facilities  in  the  Calumet  region,  along  the 
banks  of  the  Sanitary  District  canal  and  on  the  branches  of  the 
Chicago  river. 

New  Orleans  Under  a  State  Commission. 

In  New  Orleans  the  larger  part  of  the  commercial  water  front 
of  the  port  is  publicly  owned  and  is  under  the  management  of  a 
board  of  commissioners  appointed  by  the  governor  of  the  state. 
The  ownership  has  long  been  in  the  city  of  New  Orleans.  Fol- 
lowing some  dissatisfaction  with  city  management,  a  lease  of  a 
large  portion  of  the  water  frontage  was  made  to  a  private  cor- 
poration in  1891  for  a  ten-year  period.  According  to  the  terms 
of  the  lease  the  lessees  were  authorized  to  collect  and  retain  for 
themselves  all  the  charges  allowed  to  be  made  for  the  use  of 
the  property.  This  arrangement  was  productive  of  still  greater 
dissatisfaction  and  had  not  been  in  operation  long  before  an  at- 
tempt was  made  to  get  away  from  it.  The  corporation  receiving 
the  lease  spent  little  in  improvements  and  took  out  very  large 
profits.  In  1896  a  law  was  passed  by  the  general  assembly  of 
Louisiana  creating  a  board  of  commissioners  of  the  port  of  New 
Orleans,  the  members  of  which  are  appointed  by  the  governor. 

18 


This  commission  was  given  power  to  regulate  the  commerce  and 
traffic  of  the  harbor,  to  administer  the  public  wharves,  to  con- 
struct new  wharves  where  necessary,  and  was  authorized Jto  de- 
velop the  facilities  of  the  port  on  progressive  lines.  The  board 
was  not  able  to  get  control  of  the  public  wharves  until  the  ten- 
year  lease  made  in  1891  had  expired.  Since  the  board  actually 
got  control,  in  1901,  extensive  improvements  have  been  made. 
The  management  of  the  port  appears  to  have  been  progressive 
and  capable.  Charges  have  been  lowered  and  there  appears  to 
be  general  satisfaction  with  the  present  situation  on  the  part  of 
merchants  and  vesselmen.  The  city  of  New  Orleans  has  brought 
about  the  construction  of  a  switching  railroad  back  of  the 
wharves.  The  railroad  is  operated  by  a  city  commission  which 
works  in  complete  harmony  with  the  port  commissioners. 

The  Illinois  Central  Railroad  has  an  extensive  system  of  dock 
facilities  some  little  distance  north  of  the  center  of  the  city. 
While  these  facilities  are  excellent  for  the  purpose  of  the  Illi- 
nois Central  Railroad,  they  would  not  satisfy  the  needs  of  the 
port  in  general,  largely  for  the  reason  that  they  are  controlled 
by  a  railroad  which  is  interested  only  in  developing  its  own 
rail  business. 

The  Southern  Pacific  interests  control  considerable  water 
frontage  across  the  river  from  New  Orleans,  but  the  tendency 
of  these  interests  within  very  recent  years  has  been  to  make 
use  to  a  considerable  extent  of  the  public  docks  on  the  New  Or- 
leans side  of  the  river.  This  is  in  marked  contrast  to  the  situa- 
tion in  Galveston,  where  the  Southern  Pacific  has  already  con- 
structed its  own  docks,  rather  than  be  dependent  upon  the  facili- 
ties of  the  Galveston  Wharf  Company. 

The  Harbor  of  San  Francisco. 

The  harbor  of  San  Francisco,  like  that  of  New  Orleans,  is 
managed  by  a  state  commission.  The  policy  of  state  ownership 
was  adopted  in  1863.  Practically  all  of  the  water  front  avail- 
able for  commercial  uses  is  controlled  by  the  commission.  Al- 
though the  harbor  management  has  been  subjected  to  some  criti- 
cism at  times,  there  has  been  no  suggestion  of  ab^idoning  public 

tt 


ownership.  The  present  board  of  harbor  commissioners  is  mak- 
ing extensive  improvements.  Some  of  the  IICAV  piers  now  under 
construction  are  the  best  to  be  found  in  the  country  outside  of 
New  York  City.  In  one  way,  the  commission  has  lived  from 
hand  to  mouth;  that  is,  it  has  paid  for  its  improvements  chiefly 
out  of  revenues.  This  is  one  of  the  criticisms  made  against  the 
port  management.  Business  men  say  that  dock  improvements 
should  be  paid  for  out  of  bond  issues  and  carried  out  on  an 
extensive  scale.  This  policy  is  now  being  adopted.  Recent  bond 
issues  have  made  possible  the  improvements  now  in  progress 
and  it  is  the  expectation  to  put  out  other  bond  issues  in  the 
near  future  as  a  means  of  aiding  further  development. 

The  fact  that  the  management  is  in  the  hands  of  the  state 
rather  than  the  municipality  is  a  cause  of  some  embarrassment 
in  this  respect.  As  the  bonds  that  may  be  issued  by  the  port 
of  San  Francisco  are  state  bonds,  authorization  for  them  must 
be  secured  by  direct  act  of  the  legislature  and  approved  by  vote 
of  the  people  of  the  state  at  large.  It  is  the  theory,  of  course, 
that  the  revenues  of  the  port  will  be  ample  to  meet  both  prin- 
cipal and  interest  payments,  as  the  port  heretofore  has  been 
self-sustaining,  but  the  credit  of  the  state  is  behind  the  bonds. 
Los  Angeles  and  Oakland  are  planning  extensive  dock  improve- 
ments through  the  agency  of  the  municipal  government,  Cali- 
fornia is  a  large  state  with  diverse  interests  and  many  jealousies. 
San  Francisco  is  likely  to  be  subject  to  embarrassment,  there- 
fore, in  requesting  the  state  to  issue  bonds  for  its  port  develop- 
ment. In  this  respect  it  is  apparent  that  San  Francisco  might 
be  better  off  with  municipal  management  of  its  docks  in  place 
of  the  present  state  ownership. 

Many  of  the  piers  in  the  harbor  of  San  Francisco  lack  rail- 
road switch  track  connections  and  the  port  management  has 
been  criticised  on  that  account.  The  Harbor  Commissioners 
within  recent  years,  however,  hav6  constructed  and  now  operate 
a  public  belt  railroad.  The  newer  docks  are  being  provided  with 
switch  track  facilities  and  it  is  the  expectation  that  the  de- 
ficiency of  the  older  docks  in  this  respect  will  be  remedied.  The 
political  strength  of  the  teaming  interests — owners  and  employes 

30 


combined — evidently  has  been  a  factor  heretofore  in  preventing 
the  establishment  of  railroad  switch  connections  with  piers. 

Oakland,  across  the  bay  from  San  Francisco,  is  planning  ex- 
tensive harbor  developments.  Recent  litigation  has  resulted  in 
giving  the  city  title  to  water  front  areas  that  had  been  occu- 
pied by  private  companies.  The  charter  of  Oakland  has  been 
amended  so  as  to  give  the  city  power  "to  provide  for  the  con- 
struction, maintenance  and  use  of  and  on  the  water  front  of  the 
city  of  Oakland,  wharves,  docks,  slips,  warehouses,  railroads  and 
all  other  necessary  or  desirable  improvements;  to  grant  fran- 
chises as  now  or  hereafter  provided  by  law  and  also  for  the  con- 
struction and  use  of  wharves,  docks,  slips,  warehouses,  railroads 
and  railroad  terminals  on  the  water  front."  It  is  specifically 
stipulated  that  grants  to  railroads  of  the  privilege  to  reach  the 
water  front  shall  be  without  discrimination.  It  is  the  announced 
purpose  of  the  city  authorities  to  undertake  extensive  develop- 
ments on  the  basis  of  municipal  ownership. 

Montreal's  Port  a  Public  Monopoly. 

The  management  of  the  port  of  Montreal  until  recently  has 
partaken  largely  of  the  character  of  the  English  harbor  trust. 
Up  to  January  1,  1907,  the  governing  body  of  the  port  consisted 
of  commissioners  appointed  by  the  Dominion  government,  by 
the  city  of  Montreal  and  by  various  commercial  bodies.  By  the 
law  that  became  operative  January  1,  1907,  the  board  consists  of 
three  members,  all  appointed  by  the  Dominion  government,  thus 
making  the  case  one  of  federal  ownership.  There  was  criticism 
that  the  larger  body,  composed  of  members  owing  their  appoint- 
ment to  divers  sources,  did  not  work  harmoniously. 

The  Harbor  Commissioners  control  the  entire  water  front  of 
the  city  and  manage  it  on  the  basis  of  a  public  monopoly. 
Within  the  last  few  years  very  extensive  improvements  have 
been  made  and  more  are  planned  for  the  near  future.  The  Har- 
bor Commissioners  own  and  operate  a  belt  railroad,  the  tracks 
of  which  are  located  on  the  property  they  control  so  that  switch 
engines  may  be  operated  at  any  time  of  the  day  or  night.  In 
some  places,  notably  Boston,  Philadelphia  and  Baltimore,  the 

21 


switching  of  cars,  in  parts  of  the  harbor  at  least,  is  prohibited 
except  at  night.  The  facilities  for  the  interchange  of  com- 
modities between  the  railroad  and  the  boat  line  are  especially 
good  in  Montreal.  The  Harbor  Commissioners  own  grain  ele- 
vators which  recently  have  been  equipped  with  conveyor  sys- 
tems that  make  it  possible  for  the  boat  to  take  on  grain  at  the 
berth  to  which  it  goes  to  unload  its  cargo.  The  Harbor  Com- 
missioners own  the  portions  of  the  water  front  devoted  to  in- 
dustrial uses,  as  well  as  those  on  which  commercial  docks  are 
maintained.  For  industrial  purposes  the  commission  makes 
leases  to  plants,  running  for  varying  periods,  but  usually  for 
not  more  than  forty  years. 

The  port  of  Montreal  is  closed  by  ice  nearly  half  of  each 
year  and  is  subject  to  other  disadvantages.  The  improvements 
are  not  as  expensive  as  in  cities  having  a  larger  volume  of  traffic. 
But  in  adaptation  to  its  needs,  the  dock  system  of  Montreal  is 
one  of  the  best  on  the  continent.  It  is  so,  largely  because  the 
development  is  on  a  basis  of  unity,  the  harbor  commissioners 
being  the  sole  owners  of  dock  facilities  in  the  port.  The  presi- 
dent of  the  board,  Mr.  George  W.  Stephens,  and  the  chief  engi- 
neer, Mr.  Frederick  "W.  Cowie,  recently  made  a  report,  based  on 
a  tour  of  personal  inspection,  on  "British  and  Continental  Ports 
with  a  View  to  the  Development  of  the  Port  of  Montreal  and 
Canadian  Transportation."  In  that  report  they  give  the  follow- 
ing as  one  of  the  features  of  success  of  any  port : 

"(b)  Ownership  and  Control  of  the  Entire  Harbor  Area. — No  com- 
plete development  can  take  place  without  unity  of  purpose  and  concentra- 
tion of  authority.  The  value  of  complete. ownership  and  the  non-alienation 
of  any  territory  or  rights  are  inestimable.  The  existence  of  rights,  fran- 
chises or  privileges  in  the  hands  of  individuals  may  hamper  business  and 
endanger  or  discourage  further  extension. " 

The  following  are  some  of  the  "General  Impressions"  of  Mr. 
Stephens  and  Mr.  Cowie,  as  set  forth  in  their  report : 

"1.  The  ports  that  are  doing  the  biggest  business,  and  doing  it  most 
efficiently,  are  the  ports  that  have  kept  their  facilities  ahead  of  actual  re- 
quirements. 

"2.  The  ports  that  ha,ve  remained  stationary  or  lost  in. prestige  have 
been  those  that  neglected  to  provide  facilities  before  business  was  forced 


to  seek  elsewhere  the  same  facilities  provided  by  rival  terminals.     Business 
follows  the  facilities. 

' '  3.  Unity  of  authority,  concentration  of  business,  depthr  of  water 
areas,  and  facilities  for  despatch  of  business  are  the  prominent  character- 
istics of  successful  port  administration. 

"4.  The  necessity  of  providing  large  and  convenient  storage  areas 
where  cargo  may  be  collected  and  cared  for. 

"5.  The  lowest  cost  of  handling  cargo  from  the  hold  of  the  ship  to 
consignee  and  vice  versa,  was  found  to  be  in  a  port  where  one  authority 
controlled  the  entire  operation,  and  where  the  transit  sheds  were  three  to 
five  stories  high. ' ' 

Having  dealt  with  the  four  ports  on  the  American  continent 
in  which  the  ownership  is  entirely,  or  chiefly,  public,  I  will  now 
proceed  to  consider  ports  having  a  mixture  of  public,  private, 
and  railroad  ownership. 

The  Lesson  of  the  Boston  Situation. 

Boston,  to  my  mind,  is  instructive  chiefly  for  the  lesson  in  its 
failure  to  grasp  the  needs  of  its  situation  and  to  move  aggressive- 
ly for  their  satisfaction.  The  backwardness  of  Boston  with  re- 
spect to  dock  facilities  is  in  marked  contrast  with  its  progressive 
activities  in  some  other  municipal  lines.  Boston  has  had  more  re- 
ports and  studies  made  of  its  dock  situation  and  has  done  less  to 
improve  conditions  than  most  other  communities.  An  examina- 
tion of  some  of  these  various  official  reports  may  prove  instruct- 
i\e.  In  1895,  the  legislature  of  Massachusetts  created  a  commis- 
sion to  conduct  "an  investigation  of  the  wants  of  the  port  of  Bos- 
ton for  an  improved  system  of  docks  and  wharves,  and  terminal 
facilities  in  connection  therewith."  The  commission  was  spe- 
cifically instructed  to  make  a  general  study  of  the  question  of 
public  ownership  of  docks  and  wharves  and  the  desirability  of 
the  adoption  of  public  ownership  in  Boston. 

The  report  prepared  contained  much  information  and  was 
able  and  instructive.  It  found  in  favor  of  the  general  policy  of 
public  ownership.  The  following  quotation  indicates  the  point 
of  view: 

' '  Wharves  are  the  means  whereby  the  public  on  land  can  transfer  them- 
selves and  their  goods  to  the  water,  and  vice  versa, — just  as  turnpikes, 


streets  and  highways  are  the  means  for  enabling  free  and  easy  transporta- 
tion wholly  on  land.  No  impediments  or  barriers  beyond  the  limit  of  pub- 
lic control  should  be  permitted  to  obstruct  freedom  of  communication  be- 
tween land  and  water.  The  rivers  and  seas  are  the  highways  of  water- 
borne  freight  and  passengers,  and  the  right  of  landing  and  embarking  ought 
to  suffer  no  more  or  greater  legal  obstruction  than  the  right  of  traversing 
the  highway  on  sea  or  land.  It  becomes  the  duty  of  the  public,  then,  to 
preserve  that  right  for  present  and  future  use. 

"In  order  to  reap  the  fullest  enjoyment  of  this  right,  facilities  and 
conveniences  must  be  supplied  for  the  required  use.  These  necessarily  be- 
come a  charge,  owing  to  the  cost  of  construction  and  maintenance,  in  con- 
sequence of  which  a  toll  must  be  paid  by  the  users.  This  toll  is  an  una- 
voidable obstruction  to  free  transference  over  a  wharf  which  is  built  for 
increased  accommodation  and  for  lessening  the  cost  of  handling.  But  it  is 
obvious  that  the  smaller  the  toll  the  less  will  be  the  obstruction. 

"Aside,  however,  from  questions  of  natural  right  and  justice,  there  are 
other  business  and  practical  considerations  which  appear  as  satisfactory 

reasons,  as  given  in  the  communication  of  our  consuls  from  different  ports. 
***** 

"In  addition  to  the  foregoing,  from  the  testimony  which  this  commis- 
sion has  been  able  to  gather,  both  through  the  agency  of  its  committee 
who  went  abroad  in  the  summer  of  1895,  when  they  conferred  with  the 
leading  merchants  and  officials  of  seventeen  foreign  ports  (and  elsewhere), 
and  from  correspondence  and  personal  interviews,  held  with  the  representa- 
tives of  various  ports  in  this  country,  this  commission  has  become  satisfied 
that  the  reasons  for  public  ownership  and  control  reside,  as  hereinbefore 
stated,  not  only  in  those  natural  rights  which  underlie  the  exercise  of  true 
popular  liberty,  but  in  that  business  sagacity  and  far-sighted  prudence 
which  is  able  to  apply  the  principles  of  economy,  to  realize  that  delay 
means  cost  and  despatch  means  profit,  and  that  uniform  and  stable  charges 
attract  as  fixed  factors  in  a  business  calculation,  and  also  in  the  under- 
standing that  all  these  elements  are  most  completely  suppled  through  pub- 
lic ownership  and  control.'' 

While  this  commission  found  in  favor  of  the  general  prin- 
ciple of  public  ownership  of  docks,  and  recommended  certain 
developments  by  the  state  in  the  harbor  of  Boston,  it  failed  to 
apprehend  a  principle  of  dock  policy  of  more  importance  even 
than  that  of  public  ownership.  The  following  is  the  opening 
paragraph  of  its  summary  of  conclusions  and  recommendations: 

"Public  Ownership  of  Foreshore. — That  a  portion  of  the  foreshore 
should  forever  be  preserved  in  the  ownership  and  control  of  the  people, 
for  uses  and  purposes  such  as  the  needs  of  changing  conditions  may  from 

24 


time  to  time  require,  but  that  it  is  neither  necessary  nor  desirable  that 
the  entire  foreshore  of  the  harbor  should  be  thus  heldj  on  the  contrary, 
a  diversified  ownership  is  believed  to  be  healthiest,  and  therefore  the  ac- 
quisition of  certain  parcels  within  the  limits  of  the  city  of  Boston,  as  here- 
inbefore described,  is  recommended. " 

In  finding  for  "diversified  ownership"  of  port  facilities,  the 
Massachusetts  commission  ran  counter  to  the  teachings  of  ex- 
perience and  the  recommendations  of  practically  all  other  offi- 
cial and  expert  reports  upon  the  subject.  Unity  of  management 
and  development  according  to  a  comprehensive  plan  are  the  first 
requisites  to  the  highest  type  of  port.  The  curse  of  the  Boston 
situation  is  unrelated  diverse  ownership. 

On  the  strength  of  the  recommendation  made  by  this  com- 
mission, a  pier  was  built  in  the  Commonwealth  Flats  of  South 
Boston,  known  as  Commonwealth  pier.  It  was  completed  in 
1901,  at  a  cost  of  $381,877.09.  The  pier  is  1,200  feet  long  and 
400  feet  wide.  It  is  not  equipped  with  sheds  and  is  without 
switch  track  connections.  Not  even  a  regular  street  has  been 
opened  to  give  connection  with  the  pier,  although  it  is  possible 
to  drive  from  the  street  to  the  pier  over  unoccupied  land.  Un- 
der the  circumstances  it  is  small  wonder  that  the  pier  has  been 
little  used  and  that  the  revenue  derived  from  it  since  its  con- 
struction had  amounted  in  1908  to  onty  $12,847.19.  Failure  to 
lay  switch  tracks  to  the  Commonwealth  pier  presumably  is  due 
to  the  hostility  of  railroad  interests.  The  failure  to  open  a  street 
to  the  pier  has  been  due  to  the  inability  to  secure  the  co-opera- 
tion of  governmental  agencies  having  control  of  such  matters. 

The  legislature  of  Massachusetts  in  1907  again  ordered  an  in- 
quiry, this  time  by  the  Board  of  Harbor  and  Land  Commission- 
ers, into  "the  cost  and  advisability  of  constructing  and  main- 
taining a  system  of  metropolitan  docks  in  the  city  of  Boston  to 
be  owned  and  controlled  either  by  the  Commonwealth  or  by 
the  said  city." 

This  board,  still  accepting  as  gospel  the  finding  of  the  prior 
commission,  that  diverse  ownership  of  harbor  facilities  was  de- 
sirable, reached  the  following  conclusion: 

"For  various  reasons  briefly  indicated  above,  the  Board  does  not  think 

25 


it  advisable  at  present  to  construct  and  maintain  a  system  of  metropolitan 
docks  in  Boston.  The  time  may  come  when  such  construction  would  seem 
advisable,  but  at  present  it  is  in  the  opinion  of  the  Board  premature." 

In  leading  up  to  this  conclusion,  the  board  had  the  following 
to  say: 

"The  advisability  of  constructing  and  maintaining  a  system  of  piers 
under  public  control  would  seem  to  depend  primarily  on  the  immediate  ne- 
cessity for  more  dock  accommodations,  and  the  improbability  of  the  work 
being  undertaken  under  private  ownership. 

"At  the  public  hearing  on  the  resolve  no  sentiment  or  opinion  was 
expressed  in  favor  of  public  ownership  of  docks.  The  answers  of  various 
persons  to  written  inquiries  by  the  Board  did  not  favor  public  ownership 
and  control  of  wharves  and  docks;  on  the  contrary,  many  persons  ex- 
pressed themselves  in  opposition.  Even  the  most  advanced  advocates  of 
public  ownership  do  not  advocate  public  ownership  and  control  in  advance 

of  some  general  demand  or  necessity  in  some  particular  line  or  business. 
*         #         *         *         * 

' '  The  Commonwealth  pier  might  be  equipped  with  sheds,  warehouses, 
railroad  tracks  and  hoists,  if  only  some  one  could  indicate  the  use  to  which 
the  pier  would  be  put.  Sheds  sufficient  for  cheap  bulk  freight  would  not 
answer  for  storage  of  valuable  cargo.  Various  things  are  left  in  doubt 
until  a  use  is  indicated  or  a  tenant  discovered.  Besides  these  practical 
questions  there  is  the  public  question  of  going  into  the  dock  and  wharfage 
business  in  competition  with  private  owners.  There  are  other  available 
docks  ready  for  use  at  the  market  rates,  and  persons  ready  to  build  more 
docks  on  demand.  If  the  Commonwealth  is  to  enter  the  dock,  wharfage  and 
warehouse  business,  it  would  seem  proper  for  the  Legislature  to  first  con- 
sider and  decide  the  question. " 

Of  all  the  official  reports  which  I  have  seen  dealing  with  the 
subject  of  docks,  this  is  the  only  one  to  pass  even  mild  disap- 
proval upon  the  policy  of  public  ownership,  and  this  entire  re- 
port it  seems  to  me  is  detrimental  in  its  influence  upon  the 
proper  development  of  Boston,  not  so  much  because  it  fails  to 
approve  of  public  ownership  as  because  it  fails  to  comprehend 
the  pressing  need  of  Boston  with  reference  to  dock  facilities  and 
management.  The  report  of  the  president  and  chief  engineer 
of  the  Harbor  Commissioners  of  Montreal  reflected  the  experi- 
ence of  all  the  progressive  ports  of  the  world  and  the  judgment 
of  practically  all  the  official  and  expert  opinion  on  the  subject 
— outside  of  Boston — when  it  said:  "No  complete  development 


can  take  place  without  unity  of  purpose  and  concentration  of 
authority. ' ' 

The  Prime  Need  of  Boston. 

The  Boston  and  Maine  and  the  Boston  and  Albany  railroads 
have  very  good  dock  facilities  in  Boston,  but  in  each  case  the 
docks  are  maintained  and  operated  as  accessories  of  the  rail- 
roads that  own  them.  These  separate  sets  of  docks  are  not 
correlated  with  each  other  or  with  the  remaining  dock  facili- 
ties of  the  city,  nor  do  they  meet  the  needs  of  Boston  as  a  busi- 
ness community  for  dock  facilities.  The  New  York,  New  Haven 
and  Hartford  railroad  also  owns  several  piers  that  must  be  con- 
sidered good  merely  as  piers  that  form  the  water  terminal  of  a 
railroad  system,  although  for  some  reason  they  are  very  little 
used.  The  Commonwealth's  new  pier,  located  just  beyond  the 
New  York,  New  Haven  and  Hartford  piers,  although  seemingly 
offering  a  good  example  of  mere  pier  construction,  is  also  little 
used,  as  already  pointed  out.  The  dockage  facilities  on  the 
main  peninsula  of  Boston  which  are  used  for  the  accommoda- 
tion of  vessels  engaged  in  the  coastwise  and  excursion  business 
are  a  veritable  hodgepodge.  The  ownership  is  diverse.  The 
development  is  scraggly  and  uneven.  Much  of  the  property  is 
used  for  purposes  that  do  not  call  for  water  front  locations.  The 
rentals  charged  are  high  and  new  lines  seeking  dock  facilities 
would  have  difficulty  in  finding  accommodations  in  this  part  of 
the  harbor,  which  is  where  they  need  to  be.  Only  a  few  of  the 
piers  have  switch  tracks.  The  belt  railroad  located  behind  the 
piers  is  situated  in  a  busy  public  street  and  can  be  utilized  only 
at  night.  The  prime  need  of  Boston,  it  would  appear,  is  to  have 
this  portion  of  its  water  front  taken  over  and  improved  on  a 
basis  of  unity  by  some  single  authority.  To  be  sure  it  would 
cost  a  large  amount  of  money  to  acquire  this  property,  but  its 
revenue-producing  possibilities  would  be  increased  by  rearrange- 
ment and  improvement  by  a  single  authority  according  to  some 
orderly  plan.  The  welfare  of  the  community  as  a  whole  would 
be  promoted  by  such  a  course. 

There  is  very  general  agreement  that  the  dockage  facilities 
of  Boston  ar-    unsatisfactory  and  unsuited  to  the  Bleeds  of  com- 

27 


merce.  Mr.  Desmond  Fitzgerald,  the  engineer,  expressed  the 
sentiment  on  that  question  which  one  hears  generally  from  the 
men  who  understand  the  situation  in  Boston,  when  he  said  in 
his  report  to  the  Metropolitan  Improvements  Commission:  "No 
one  versed  in  sane  construction  can  visit  the  dock  terminals  of 
Boston  without  realizing  that  they  are  in  the  main  the  product 
of  haphazard  and  patchwork  policy — largely  unworthy  of  the 
port  and  unsafe  for  present  and  expected  passenger  and  freight 
business." 

The  Metropolitan  Improvements  Commission,  created  by  the 
legislature  of  Massachusetts  in  1907  to  study  the  Boston  situa- 
tion, to  my  mind  manifested  a  much  keener  appreciation  of  the 
nature  of  the  problem,  confronting  Boston  than  either  of  the 
two  reports  thus  far  considered. 

The  extracts  from  the  report  of  this  commission  which  I  de- 
sire to  present  are  too  extended  for  insertion  in  the  text  of  this 
report.  Hence,  they  are  published  at  the  end  as  "Appendix  B." 
The  burden  of  the  report  is  that  development  should  be  under- 
taken in  accordance  with  a  comprehensive  plan,  and  that  that 
plan  should  take  account  not  only  of  water  terminals,  but  of 
rail  terminals  as  well. 

While  the  suggestion  of  the  Metropolitan  Improvements  Com- 
mission is  that  the  work  of  improvement  be  undertaken  by  a 
terminal  company,  it  lays  due  emphasis  upon  the  need  for  public 
direction  in  such  matters.  It  is  recommended  that  the  Common- 
wealth be  given  a  direct  hand  in  the  management  of  the  terminal 
company  through  the  election  by  it  of  a  definite  proportion  of 
the  board  of  directors. 

The  report  of  the  Metropolitan  Improvements  Commission 
has  only  recently  been  made  public.  Presumably  its  recom- 
mendations will  receive  the  serious  attention  of  the  legislature 
that  meets  next  winter. 

The  Move  for  Municipal  Ownership  in  Philadelphia  and 
Baltimore. 

Philadelphia  is  a  port  which  has  suffered  much  from  railroad 
domination.  The  Pennsylvania  and  the  Philadelphia  and  Eead- 

38 


ing  railroad  companies  own  a  large  proportion  of  the  water 
front.  The  city  owns  a  few  piers,  while  others  are  the  property 
of  various  private  owners.  There  is  a  strong  public  sentiment 
for  the  municipal  ownership  of  more  docks,  as  evidenced  by  the 
action  of  business  organizations,  led  by  the  Maritime  Exchange, 
in  securing  legislation  enlarging  the  city's  charter  powers.  In 
response  to  this  movement  the  legislature  in  1907  enacted  a  law 
creating  a  department  of  wharves,  docks  and  ferries  and  au- 
thorizing the  city  to  acquire,  construct  and  own  additional  piers. 
There  has  been  considerable  adverse  public  criticism  because  the 
first  head  of  the  Department  of  Wharves,  Docks  and  Ferries 
made  no  serious  move  to  carry  out  the  purpose  of  the  act  with 
reference  to  the  acquisition  by  the  city  of  additional  dockage 
facilities.  There  has  recently  been  a  change  in  the  head  of  this 
department  and  it  is  expected  that  more  active  steps  will  be 
taken  in  the  near  future  in  furtherance  of  the  purpose  of  the 
act  creating  the  department.  No  well-defined  comprehensive 
program  of  dock  development  appears  to  have  been  worked  out 
in  Philadelphia.  The  idea  seems  to  be  merely  that  the  dock  de- 
partment shall  create  new  piers  wherever  there  are  available  lo- 
cations. However,  the  situation  in  Philadelphia  is  naturally 
simpler  than  that  in  Boston  and  in  some  other  cities. 

In  Baltimore,  as  in  Philadelphia,  the  principal  dockage  facili- 
ties have  been  owned  by  the  railroads,  together  with  diverse 
private  ownership.  The  movement  for  municipal  ownership  of 
docks,  which  is  now  Avell  under  way  in  Baltimore,  received  its 
chief  impetus  from  the  great  fire  of  1904.  In  accordance  with 
the  recommendations  of  the  Burnt  District  Commission,  the  Har- 
bor Board  was  created  as  a  sub-department  of  the  Department 
of  Public  Improvements.  The  legislature  conferred  upon  the 
city  the  power  to  acquire  the  title  to  water  front  property  and 
construct  piers  thereon.  Inasmuch  as  the  docks  in  the  business 
center  had  been  destroyed  by  fire,  it  was  a  natural  thing  for  the 
city  to  begin  the  work  of  pier  construction  in  that  area.  New 
harbor  lines  were  established  and  a  plan  of  comprehensive  de- 
velopment outlined  to  be  carried  out  as  rapidly  as  the  condi- 
tions should  warrant.  The  small  and  inadequate  piers  were  re- 
placed by  larger  ones  having  slips  of  greater  width  and  other- 

29 


Avise  better  fitted  for  the  accommodation  of  shipping.  Balti- 
more, on  account  of  the  fire,  is  doing  what  Boston  should  do, 
that  is,  beginning  the  work  of  reconstruction  in  the  very  center 
of  the  harbor  where  property  values  are  the  highest. 

Norfolk  has  a  combination  of  railroad  and  private  ownership 
with  some  street  ends  still  in  the  possession  of  the  city.  New- 
port News  is  an  example  of  a  railroad-owned  port,  the  dockage 
facilities  there  being  the  property  of  the  Chesapeake  and  Ohio 
railroad. 

•v 

The  Galveston  Wharf  Company. 

The  port  of  Galveston  presents  the  best  example  of  private 
ownership  coming  within  my  observation.  This  is  because  the 
development  in  Galveston,  although  private,  is  upon  the  basis  of 
unity.  The  Galveston  Wharf  Company  was  incorporated  by  spe- 
cial act  of  the  Texas  legislature,  in  1854,  the  original  name  be- 
ing the  Galveston  Wharf  and  Cotton  Press  Company.  The  com- 
pany owned  the  land  bordering  on  the  water,  but  the  city  owned 
the  street  ends.  After  considerable  controversy  between  the 
company  and  the  city  a  compromise  arrangement  was  arrived  at 
in  1869,  under  which  the  city  gave  the  street  ends  to  the  com- 
pany in  return  for  which  the  company  turned  over  to  the  city 
one-third  of  its  capital  stock.  By  the  arrangement  the  city 
names  one-third  of  the  directorate,  but  is  not  allowed  to  vote 
its  stock  in  the  selection  of  the  other  directors.  In  order  to  in- 
sure control  of  the  affairs  of  the  company  by  the  private  stock- 
holders, it  is  expressly  stipulated  that  in  all  stockholders'  meet- 
ings no  measure  shall  be  adopted  or  action  taken  except  by  the 
vote  of  three-fourths  of  all  the  stock  of  the  company,  exclusive 
of  that  held  by  the  city.  While,  therefore,  the  city  has  one- 
third  of  the  stock  and  thus  receives  one-third  of  the  dividends 
declared,  and  while  it  is  represented  on  the  board  of  directors, 
the  dominating  control  in  shaping  the  policy  of  the  company  is 
private. 

The  Galveston  Wharf  Company  is'  a  wharf  company  pure  and 
simple.  It  is  not  interested  in  transportation  lines,  either  rail 
or  water,  except  that  it  owns  and  operates  the  belt  railroad 
which  gives  switch  track  connections  with  the  piers.  The  facili- 

30 


ties  offered  for  the  accommodation  of  shipping  are  creditable. 
The  only  criticism  offered  is  that  the  charges  are  said  by  some 
to  be  high.  The  Southern  Pacific  railroad  has  already  -estab- 
lished dock  facilities  of  its  own  in  the  port  of  Galveston  and  it 
is  said  that  the  Rock  Island  and  Santa  Fe  systems  will  do  the 
same  in  the  near  future,  as  a  means  of  economy.  This  action  of 
the  three  railroads  creates  diversity  where  before  there  was 
unity,  but  this  does  not  signify  so  much  in  Galveston  as  it  might 
in  other  situations.  The  Galveston  Wharf  Company  controls 
the  water  front  nearest  to  the  business  center  of  the  city  and 
will  continue  to  develop  and  manage  that  according  to  a  har- 
monious plan.  The  three  railroad  systems  in  question  probably 
will  not  undertake  to  do  more  than  provide  landing  places  for 
vessels  doing  an  extensive  business  with  the  particular  railroad. 
The  Galveston  Wharf  Company  has  not  paid  large  dividends,  but 
it  is  supposed  to  be  putting  a  considerable  proportion  of  its 
earnings  into  permanent  improvements.  The  great  storm  of  1900 
put  the  company  to  an  expense  of  about  $650,000  in  repairing 
damage  done  to  its  property. 

There  appears  to  be  no  demand  for  public  ownership  and 
management  of  the  wharf  system  in  Galveston.  On  account  of 
its  misfortunes  the  city  has  been  put  to  heavy  expense  in  mak- 
ing public  improvements  and  is  evidently  satisfied  to  leave  to 
the  Galveston  Wharf  Company  the  task  of  keeping  the  wharves 
in  condition  for  the  accommodation  of  shipping. 

Although  the  volume  of  shipping  through  the  port  of  Galves- 
ton is  large,  the  city  itself  is  small,  and  the  local  business  conse- 
quently is  of  less  importance.  Galveston  is  primarily  a  transfer 
point  between  the  boats  and  the  railroads.  There  is  not,  there- 
fore, so  much  need  for  public  ownership  in  Galveston  from  the 
community  point  of  view  as  might  be  the  case  in  a  larger  city 
in  which  the  local  business  was  a  matter  of  more  concern.  Rail- 
roads are  the  chief  parties  in  interest  in  the  Galveston  situa- 
tion, inasmuch  as  their  rates  on  traffic  through  the  port  of  Gal- 
veston must  take  account  of  the  wharf  charges  at  that  port  and 
the  railroads  are  better  able  to  look  out  for  themselves  than 
would  be  a  large  number  of  smaller  shippers  not  so  closely 

31 


bound  together.     Some  of  the  railroads,  as  already  stated,  are 
looking  out  for  themselves  by  building  docks  of  their  own. 

Activity  in  Los  Angeles. 

Los  Angeles  is  a  city  that  has  been  aroused  to  the  need  for 
progressive  port  development  largely  by  the  hope  that  the  open- 
ing of  the  Panama  canal  will  mean  a  tremendous  increase  in  the 
volume  of  shipping  for  the  Pacific  coast.  Los  Angeles  is  situ- 
ated some  twenty-five  miles  from  the  Pacific  ocean.  Its  natural 
port  is  the  harbor  of  San  Pedro,  adjacent  to  which  are  the  vil- 
lages of  San  Pedro  and  Wilmington.  These  villages,  of  course, 
were  unable  to  develop  the  port  facilities  on  a  public  basis  and 
private  interests  seemed  destined  to  get  control  of  all  the  avail- 
able water  frontage.  To  forestall  this,  Los  Angeles  outlined 
and  carried  through  a  plan  for  consolidation  with  the  villages 
of  San  Pedro  and  Wilmington  which  should  enable  it  to  take 
charge  of  the  development  of  the  harbor  of  San  Pedro.  With 
considerable  difficulty  an  enabling  act  was  secured  from  the 
legislature  designed  to  permit  Los  Angeles  to  take  in  a  narrow 
strip  of  land  running  from  the  original  limits  of  the  city  to  the 
seacoast,  and  then  spreading  out  to  take  in  the  villages  of  San 
Pedro  and  Wilmington.  Strong  efforts  were  made  by  private 
interests  to  defeat  the  project  through  an  adverse  vote  in  one  or 
the  other  of  the  villages.  In  order  to  carry  the  proposition 
through,  the  leaders  of  the  consolidated  movement  in  Los  An- 
geles give  assurance  that  $10,000.000  would  be  spent  by  the  city 
of  Los  Angeles  in  the  next  ten  years  in  the  development  of  mun- 
icipal docks  in  the  harbor  of  San  Pedro.  The  vote  for  the  con- 
solidation in  San  Pedro  was  726  for  to  227  against.  The  vote 
in  Wilmington  was  107  for  to  61  against  consolidation.  The 
strength  of  the  movement  in  Los  Angeles  proper  was  indicated 
by  the  fact  that  the  vote  there  for  the  proposition  was  in  excess 
of  13,000  to  only  about  200  against. 

These  votes  were  taken  in  August  last.  Litigation  has  al- 
ready been  started  with  a  view  to  recovering  for  the  public 
water  frontage  areas  which  it  is  contended  are  now  held  illegally 
by  private  parties.  A  view  of  the  map  of  the  consolidated  area 
gives  one  the  impression  that  Los  Angeles  is  literally  reaching 


out  its  arm  to  the  ocean  to  seize  its  share  of  the  future  shipping 
of  the  Pacific  coast. 

Seattle's  Wise  Plans  Thwarted. 

Seattle,  Washington,  with  an  excellent  location  on  Puget 
Sound,  is  an  example  of  a  community  which  started  out,  upon 
the  admission  of  the  state  of  Washington  into  the  Union  in  1889, 
with  the  deliberate  intention  of  having  public  ownership,  but 
which  finds  itself  thwarted  in  that  respect.  Following  are  some 
of  the  provisions  of  the  constitution  of  Washington,  adopted  at 
the  time  of  the  admission  of  the  state  to  the  Union: 

Article  XV,  Section  I. — The  Legislature  shall  provide  for  the  appoint- 
ment of  a  commission  whose  duty  it  shall  be  to  locate  and  establish  harbor 
lines  in  the  navigable  waters  of  all  harbors,  estuaries,  bays  and  inlets  of 
this  state,  wherever  such  navigable  waters  lie  within  or  in  front  of  the  cor- 
porate limits  of  any  city  or  within  one  mile  thereof  upon  either  side.  The 
state  shall  never  give,  sell,  or  lease  to  any  private  person,  corporation,  or 
association  any  rights  whatever  in  the  waters  beyond  such  harbor  lines, 
nor  shall  any  of  the  area  lying  between  any  harbor  line  and  the  line  of  ordi- 
nary high  tide,  and  within  not  less  than  fifty  feet  nor  more  than  600  feet  of 
such  harbor  line  (as  the  commissioners  shall  determine)  be  sold  or  granted 
by  the  state,  nor  its  right  to  control  the  same  relinquished,  but  such  area 
shall  be  forever  reserved  for  landings,  wharves,  streets,  and  other  conven- 
iences of  navigation  and  commerce. 

Article  XV,  Section  2. — The  Legislature  shall  provide  general  laws  for 
the  leasing  of  the  right  to  build  and  maintain  wharves,  docks,  and  other 
structures  upon  the  areas  mentioned  in  Section  1  of  this  article,  but  no 
lease  shall  be  made  for  any  term  longer  than  thirty  years,  or  the  Legislature 
may  provide  by  general  laws  for  the  building  and  maintaining  upon  such 
area,  wharves,  docks,  and  other  structures. 

Article  XVII,  Section  1. — The  State  of  Washington  asserts  its  owner- 
ship to  the  beds  and  shores  of  all  navigable  waters  in  the  state  up  to  and 
including  the  line  of  ordinary  high  tide,  in  waters  where  the  tide  ebbs  and 
flows,  and  up  to  and  including  the  line  of  ordinary  high  water  within  the 
banks  of  all  navigable  rivers  and  lakes:  Provided,  That  this  section  shall 
not  be  construed  so  as  to  debar  any  person  from  asserting  his  claim  to 
vested  rights  in  the  courts  of  the  state. 

Article  XXVII,  Section  2. — All  laws  now  in  force  in  the  territory  of 
Washington,  which  are  not  repugnant  to  this  constitution,  shall  remain 
in  force  until  they  expire  by  their  own  limitation,  or  are  altered  or  re- 
pealed by  the  Legislature:  Provided,  That  this  section  shall  not  be  so  con- 

33 


strued  as  to  validate  any  act  of  the  Legislature  of  Washington  Territory 
granting  shore  or  tide  lands  to  any  person,  company,  or  any  municipal  or 
private  corporation. 

It  was  the  evident  intent  of  the  framers  of  the  Washington 
constitution  that  the  state  should  maintain  the  ownership  of 
the  water  front  of  the  cities  of  the  state  in  much  the  same  man- 
ner as  California  had  retained  the  ownership  of  the  water  front 
of  S'an  Francisco.  This  intent  was  even  recognized  by  the  Su- 
preme Court  of  the  United  States  in  an  opinion  rendered  Decem- 
ber 19,  1892,  delivered  by  Chief  Justice  Fuller,  in  the  case  of 
"Yesler  vs.  The  Harbor  Line  Commission,"  in  which  it  was  said: 
"The  design  of  the  state  law  is  to  prohibit  the  encroachment  by 
private  individuals  and  corporations  on  navigable  waters,  and  to 
secure  a  uniform  water  front." 

The  first  Harbor  Line  Commission  that  was  appointed  took 
this  view  both  of  the  constitution  and  of  the  act  of  the  legisla- 
ture creating  it.  In  its  second  and  final  report,  submitted  in  1893, 
this  commission,  after  quoting  portions  of  the  opinion  of  the 
Supreme  Court  of  the  United  States  in  the  Illinois  Central  Lake 
Front  case,  proceeded  to  say: 

"For  these  and  other  reasons  mentioned  in  the  exhaustive  opinion  of 
the  court,  delivered  by  Mr.  Justice  Field,  it  was  held  that  the  grant  made 
by  the  Legislature  was  a  revocable  one,  and  that  no  legislature  had  the 
right  to  make  a  permanent  transfer  of  the  public  property  of  the  people  of 
the  State  of  Illinois  in  their  navigable  waters  to  any  private  corporation. 
It  is  precisely  in  accordance  with  the  principles  laid  down  in  the  decision 
from  which  we  have  just  quoted,  that  the  people  of  the  State  of  Washington 
have  wisely  determined  to  reserve  from  sale  and  reserve  for  public  use 
so  much  of  the  water  front  in  its  harbors,  not  exceeding  six  hundred  feet 
in  width,  as  may  be  necessary  for  commercial  purposes.  In  view  of  the 
fact  that  the  navigable  waters  of  the  state  and  the  lands  under  them  should 
be  held  for  public  use,  and  also  of  the  further  fact  that  the  jurisdiction  of 
the  United  States  extends  over  these  navigable  waters,  the  State  of  Wash- 
ington has  very  wisely  and  properly  refrained  from  any  attempt  to  sell 
or  dispose  of  any  tide  lands  below  the  line  of  mean  low  water.  The  State 
of  Illinois  and  other  states  of  the  Union,  notably  New  Jersey,  have  gotten 
themselves  into  serious  difficulties  not  only  with  their  own  citizens,  but 
with  the  National  Government,  by  undertaking  to  sell,  grant  and  otherwise 
dispose  of,  in  fee  simple,  the  lands  they  own  under  their  navigable  waters. 
The  tide  lands  of  the  State  of  Washington,  which  lie  between  high  and  low. 

34 


water,  may  be  sold  without  injury  to  the  interests  of  commerce  arid  naviga- 
tion, but  we  think  a  mistake  would  be  made  if  any  measures  were  adopted 
looking  to  the  disposal  of  the  lands  below  the  line  of  low  waler._  These 
lands  should  be  kept  for  public  use,  together  with  all  areas  reserved  within 
established  harbor  lines  and  water  ways.  The  history  of  those  older  states 
which  have  large  commercial  interests  is  full  of  the  evidence  of  loose,  negli- 
gent or  wilfully  corrupt  management  of  their  properties  upon  the  water 
front  of  their  various  harbors.  The  state  and  city  of  New  York,  for  ex- 
ample, have  been  striving  for  years  in  the  courts,  by  means  of  condemna- 
tion proceedings  and  otherwise,  at  vast  expense,  to  recover  their  control 
of  the  water  front  of  that  city,  in  order  that  it  may  be  properly  main- 
tained and  improved  for  the  public  benefit.  In  the  year  1810,  the  city 
granted  to  John  Jacob  Astor  certain  water  lots  in  the  lower  part  of  the 
city  of  New  York,  aggregating  425  feet  and  4  1-4  inches  along  the  water 
front  at  a  yearly  rental  of  $356.91.  In  the  year  1892,  his  heirs  were  paid, 
after  a  long  and  expensive  course  of  litigation,  the  sum  of  $520,709.49,  in 
order  to  secure  their  relinquishment  of  the  claim  they  held  to  wharfage 
rights  upon  this  property.  Other  examples  of  a  similar  character  might  be 
quoted.  It  is  certainly  desirable  that  the  State  of  Washington  should  avoid 
as  far  as  possible  the  errors  and  mistakes  of  management  into  which  the 
older  states  have  fallen  in  the  care  of  so  valuable  and  important  a  public 
trust." 

A  Great  Opportunity  Wasted. 

When  this  Harbor  Line  Commission  undertook  to  lay  out 
harbor  lines  in  furtherance  of  its  announced  policy  it  was  bit- 
terly opposed  by  various  interests.  Through  litigation  this  com- 
mission was  estopped  from  carrying  out  its  program  and  laying 
out  harbor  lines  in  accordance  therewith  in  Seattle  and  in  other 
principal  cities  of  the  state.  The  expiration  of  the  term  of  office 
of  the  commission  found  its  work  uncompleted.  The  legislature 
made  provision  for  a  new  harbor  line  commission  differently 
constituted.  This  new  commission  proceeded  to  lay  out  harbor 
lines  in  Seattle  and  the  other  large  cities  which  clearly  did  vio- 
lence to  the  spirit  of  the  constitution.  The  inner  harbor  line 
was  located  well  out  in  deep  water,  in  many  cases  several  hun- 
dred feet  beyond  the  actual  physical  inner  harbor  line.  The 
outer  harbor  line,  of  course,  would  be  still  farther  out.  In  many 
cases  the  inner  harbor  line,  as  located  by  the  new  commission, 
was  beyond  the  end  of  the  piers  as  actually  constructed,  and  in 
the  case  of  the  longer  piers  even  as  nowT  existing,  not  more  than 

35 


300  or  400  feet  of  the  piers  extends  beyond  the  inner  harbor  line. 
The  land  under  water  inside  the  inner  harbor  line  as  constituted 
by  the  new  commission  was  then  sold  at  nominal  prices  to  the 
owners  of  the  adjacent  shore  lands.  Thus  the  piers  of  moderate 
length  became  private  property.  The  longer  piers  were  partially 
private  property  and  partially  on  land  belonging  to  the  state, 
the  portion  of  the  land  under  water  on  which  the  pier  rested 
outside  the  inner  harbor  line  being  leased  by  the  state  to  the 
pier  owner  for  a  thirty-year  period  at  a  nominal  rental.  Thus 
Seattle,  despite  its  constitutional  provisions  designed  to  insure 
state  ownership  and  uniform  development,  in  reality  has  private 
ownership  and  scraggly  and  uneven  development.  The  land  un- 
der water  to  which  the  state  has  retained  title  under  the  harbor 
lines  as  laid  out  is  of  little  value  for  dockage  purposes.  The 
city  of  Seattle  is  the  owner  of  a  number  of  street  ends,  but  these 
street  ends,  as  a  rule,  merely  serve  as  slips  for  the  benefit  of  the 
privately  owned  piers  on  either  side  thereof. 

There  are  citizens  of  Seattle  who  contend  that  the  situation 
as  actually  developed  is  a  fraud  upon  its  face  and  a  perversion 
of  the  letter  as  well  as  the  spirit  of  the  constitution  of  the  state. 
It  is  likely  that  this  contention  will  some  day  be  pushed  to  the 
point  where  the  courts  will  be  obliged  to  pass  upon  it. 

One  cannot  look  into  the  situation  in  Seattle  without  feeling 
that  a  great  opportunity  has  been  wasted  by  that  city.  Dock 
property  now  privately  owned,  but  which  was  intended  to  re- 
main the  property  of  the  state,  has  increased  enormously  in 
value  in  recent  years.  Had  title  remained  in  the  state,  the  pub- 
lic would  have  been  in  a  position  to  derive  large  revenue  from 
the  leases  of  dock  facilities,  or  it  would  have  been  in  a  position 
to  provide  for  a  reduction  in  charges  for  the  benefit  of  commerce. 

The  ownership  is  railroad  and  private.  The  situation  re- 
minds one  much  of  that  in  Boston,  the  development  in  both 
places  being  scraggly  and  uneven  and  much  of  the  water  front 
property  is  devoted  to  business  purposes  other  than  the  accom- 
modation of  shipping.  Seattle  is  much  better  off  than  Boston, 
however,  in  that  it  has  good  switch  track  facilities  connected 
with  the  railroads  operating  in  Eailroad  avenue  back  of  the 
piers, 

36 


The  original  law  provided  that  75  per  cent,  of  the  revenues 
derived  from  the  sale  of  tide  lands  in  any  given  port  should  be 
used  as  a  special  fund  "for  the  construction  and  maintenance 
of  a  system  of  permanent  and  substantial  improvements  in  aid 
of  commerce  and  navigation  in  and  for  the  harbor  of  such  city 
or  town  wherein  such  tide  lands  may  be  sold." 

It  was  evidently  the  intention  that  the  state  should  embark 
upon  a  policy  of  construction  and  ownership  of  dock  facilities 
as  was  done  in  San  Francisco.  But  the  revenues  derived  from 
the  sale  of  tide  lands  have  not  been  utilized  for  this  purpose. 

A  vital  defect  of  the  situation  in  Seattle  is  that  there  is  no 
harbor  authority  as  such,  of  any  importance.  There  is  a  harbor 
master  in  Seattle,  but  his  powers  and  duties  are  very  limited. 
The  state's  agent  in  looking  after  wharf  property  is  the  com- 
missioner of  public  lands,  who,  as  the  name  of  the  office  implies, 
concerns  himself  chiefly  with  the  state's  interest  as  a  land  owner. 
There  is  no  official  charged  with  the  duty  of  looking  after  the 
public's  interests  in  the  harbors  of  the  state  from  the  naviga- 
tion or  commercial  point  of  view. 

The  situation  in  Tacoma  is  very  much  the  same  as  that  in 
Seattle.  Control  of  practically  all  the  water  front  has  passed  into 
the  hands  of  the  railroads  and  other  private  owners. 

There  is  some  agitation  in  Seattle  to  create  a  port  authority 
to  look  after  tne  shipping  interests  of  the  city.  A  bill  urged 
for  passage  in  the  last  legislature,  but  without  success,  gave  to 
the  particular  commission  it  was  intended  to  create,  power  to 
take  property,  construct  docks,  and  to  raise  part  of  the  revenue 
therefor  by  special  assessment  upon  property  benefited.  It  was 
specially  made  the  duty  of  this  commission  to  "adopt  a  compre- 
hensive scheme  of  harbor  development. " 

Portland,  Oregon,  located  on  the  Willamette  river,  has  di- 
verse ownership,  partially  railroad  and  partially  private.  As  in 
other  such  ports,  the  developments  are  scraggly  and  uneven, 
with  a  water  front  devoted  to  a  considerable  extent  to  business 
purposes  other  than  the  accommodation  of  shipping.  There  ap- 
pears to  be  some  agitation  on  the  part  of  the  public  for  munic- 
ipal ownership  of  docks  in  Portland,  although  there  is  no  official 

37 


movement  in  that  direction.     A  recent  public  policy  referendum 
vote  showed  a  substantial  majority  in  favor  of  public  ownership. 

Vancouver,  British  Columbia,  furnishes  a  case  of  railroad 
ownership,  nearly  all  the  water  front  devoted  to  dockage  uses 
being  the  property  of  the  Canadian  Pacific  railroad.  The  piers 
devoted  to  the  general  shipping  business  are  operated  by  com- 
panies that  take  leases  from  the  Canadian  Pacific  railroad.  The 
principal  purpose  of  the  development  that  has  thus  far  taken 
place  is  to  serve  the  interests  of  the  Canadian  Pacific  railroad 
as  a  rail  carrier.  The  local  interests  of  the  port  have  been  treated 
as  secondary. 

In  the  Great  Lakes  Ports. 

In  the  ports  of  the  Great  Lakes  rail  and  private  ownership  is 
the  rule.  In  some  of  these  ports  exceptional  facilities  have  been 
provided  for  handling  the  great  bulk  commodities  of  lake  com- 
merce. The  facilities  of  Duluth,  for  example,  for  sending  out  iron 
ore  and  receiving  coal,  are  remarkably  good.  Cleveland,  like- 
wise, has  an  especially  good  equipment  for  loading  coal  onto  the 
vessels.  The  accommodations  for  the  passenger  and  package 
freight  boats  are  commonly  owned  either  by  railroad  companies 
or  by  the  boat  lines  themselves.  There  is  very  little  public  own- 
ership of  docks  on  the  Great  Lakes  nor  is  there  ownership  by 
companies  engaged  in  the  dock  business,  like  the  Galveston 
Wharf  Company.  Practically  all  the  water  front  of  Buffalo  is 
owned  by  the  various  railroads  which  also  control  the  boat  lines 
engaged  in  the  package  freight  business  at  that  port.  As  was 
pointed  out  in  the  report  submitted  by  me  to  the  Harbor  Com- 
mission, this  railroad  control  of  dock  facilities  in  Buffalo  does 
much  to  enable  the  railroads  to  dominate  the  lake  shipping  busi- 
ness and  to  keep  independent  boat  lines  out  of  the  field,  to  the 
detriment  of  the  entire  area  naturally  tributary  to  the  Great 
Lakes.  The  principal  dockage  facilities  in  Milwaukee  are  owned 
by  the  Chicago,  Milwaukee  and  St.  Paul  railroad.  The  facili- 
ties afforded  by  these  docks  for  handling  package  freight 
through  Milwaukee  are  much  more  satisfactory  than  the  facili- 
ties offered  in  Chicago  and  help  to  explain  the  rapid  growth  of 
the  package  freight  traffic  in  the  port  of  Milwaukee.  The  fol- 

38 


lowing  table  shows  the  combined  receipts  and  shipments  by 
tons  of  unclassified  freight  of  the  ports  of  Chicago  (including 
South  Chicago)  and  Milwaukee,  for  the  years  named: 

Chicago.  Milwaukee. 

1901  1,465,339  923,423 

1902  1,899,418  1,064,172 

1903  1,645,084  983,694 

1904  1,432,608  953,095 

1905  1,738,096  1,116,121 

1906  1,640,010  1,162,950 

1907  1,733,678  1,545,920 

Chicago  is  in  the  crudest  stage,  in  which  each  boat  line  is 
expected  to  look  out  for  itself  and  find  dockage  accommodations 
where  it  can.  The  various  railroad  companies  have  piers  where 
vessels  can  take  on  and  unload  freight  for  that  particular  rail- 
road. But  for  its  city  and  miscellaneous  business  each  boat 
company  must  have  accommodations  of  its  own.  It  would  be 
.more  economical  and  better  for  all  concerned  if  a  system  of 
piers  could  be  provided  where  all  the  boats  engaged  in  the  pas- 
senger business  and  in  the  package  freight  and  fruit  and  vege- 
table traffic  could  be  brought  together. 

The  comparison  of  charges  of  different  ports  is  a  matter  of 
very  great  difficulty  because  of  the  different  systems  in  use. 
With  New  Orleans  collecting  its  revenues  by  dockage  dues 
against  the  vessel  and  Galveston  imposing  charges  only  against 
the  goods,  it  is  not  an  easy  matter  to  decide  which  port  gives 
the  cheaper  service  and  how  much  the  difference  may  be.  The 
difficulty  is  increased  many  fold  in  undertaking  to  compare  either 
New  Orleans  or  Galveston  with  New  York  City,  where  most  of 
'the  piers  are  under  rental  and  no  such  charges  as  dockage  or 
wharfage  appear. 

The  Royal  Commission  appointed  to  inquire  into  the  adminis- 
tration of  the  port,  of  London  made  very  elaborate  comparisons 
of  the  charges  of  London  with  other  ports  and  found  the  charges 
in  London  to  be  higher  than  in  cities  with  public  ownership  or 
harbor  trust  management. 

A  statement  prepared  on  January  3,  1907,  for  the  Commis- 

39 


sioners  of  the  Port  of  New  Orleans  gives  the  actual  charges  paid 
by  the  Civilian  of  the  Harrison  line  in  the  port  of  New  Orleans 
as  $894.06.  The  statement  as  submitted  to  the  New  Orleans 
commissioners  purports  to  figure  what  the  charges  would  have 
been  on  the  same  vessel  and  its  cargo  in  the  port  of  Galveston, 
on  the  basis  of  the  Galveston  wharfage  rates.  According  to  this 
statement,  the  charges  against  the  vessel  and  cargo  in  the  port 
of  Galveston  would  have  been  $4,201.53,  or  more  than  four  times 
the  actual  charges  in  the  port  of  New  Orleans.  Although  there 
can  be  no  doubt  that  the  charges  for  service  in  New  Orleans 
under  public  ownership  are  lower  than  in  Galveston  under  pri- 
vate ownership,  it  is  improbable  that  the  average  disparity  would 
be  as  much  as  this  particular  statement  shows. 

There  can  be  no  doubt,  either,  that  the  dock  charges  in  San 
Francisco  under  public  ownership  are  lower  than  in  Seattle  and 
other  ports  on  the  Pacific  Coast  under  private  ownership,  al- 
though it  is  difficult  to  deal  in  precise  figures.  In  Seattle  the 
prevailing  charge  is  50"  cents  a  ton  Tjpon  goods  moved  over  the 
wharf,  with  no  charge  against  the  vessel.  The  prevailing  charge 
against  goods  in  San  Francisco  is  only  5  cents  a  ton,  but  there 
is  also  a  dockage  charge  against  the  vessel.  The  officials  in  San 
Francisco  claim  that  their  dockage  charge  against  the  vessel, 
'combinJed  with  the  toll  of  5  cents  a  ton  against  the  goods,  amounts 
to  about  one-third  or  one-half  of  the  charge  imposed  against  the 
goods  in  Seattle. 

Montreal,  at  the  eastern  terminus  of  the  Canadian  Pacific 
Railroad,  under  public  ownership,  has  much  lower  schedules  of 
dock  charges  than  Vancouver,  the  Pacific  terminal  of  the 
Canadian  Pacific  Railway,  under  railroad  ownership.  As  before 
stated,  however,  no  charge  whatever  is  made  in  the  railroad-' 
owned  port  on  goods  having  a  rail  haul. 

The  charges  of  Montreal  are  comparable  with  the  charges 
of  Galveston,  or  with  those  of  the  railroad-owned  docks  in  Boston 
upon  goods  not  having  a  rail  haul.  The  Montreal  rates  are 
much  lower.  The  dock  charge  on  asphalt,  for  example,  in  the 
port  of  Montreal  is  8  cents  per  ton.  In  Galveston  it  is  l1^  cents 
per  100  pounds,  or  25  cents  a  ton,  while  in  Boston  the  charge 

40 


is  40  cents  for  a  long  ton  of  2,240  pounds.     Other  items  are 
likely  to  show  about  the  same  differences. 

The  Benefits  of  Public  Ownership. 

A  study  of  the  principal  ports  of  the  world  discloses  that 
those  with  the  most  progressive  development  are  owned  by  pub- 
lic authorities,  either  state  or  municipal,  or  are  managed  by 
harbor  trusts.  The  chief  exception  is  Galveston,  which  fur- 
nishes an  example  of  progressive  development  under  private 
control.  Railroad  ownership  of  docks  affords  efficient  service, 
as  a  rule,  for  railroad  purposes,  but  railroad-owned  docks  do 
not  satisfy  the  needs  of  a  community  for  facilities  for  handling 
traffic  not  transferred  to  or  from  railroad  carriers.  "Where  one 
raiload  owns  the  docks,  other  railroads  are  placed  at  a  disad- 
vantage, to  the  injury  of  the  community  at  large.  Moreover, 
while  railroads  encourage  connecting  ocean  traffic,  with  which 
rail  competition  is  impossible,  they  seek  to  suppress  coastwise 
traffic  and  inland  water  transportation.  Control  of  dock  facili- 
ties is  an  important  aid  to  the  railroads  in  suppressing  competi- 
tion by  water  carriers.  As  a  rule  the  most  wide  awake  and 
public  spirited  communities  that  have  private  ownership  of  docks 
are  making  moves  to  bring  about  public  ownership. 

Unity  and  development  according  to  a  comprehensive  plan 
are  the  chief  essentials  to  a  well  ordered  port.  It  is  rare  in- 
deed that  private  ownership  signifies  harmonious  development  on 
a  basis  of  unity.  And  where  it  does  there  is  the  specter  of  man- 
agement in  the  interest  of  private  monopoly.  Diverse  private 
ownership  means  scraggly,  uneven  and  unrelated  development. 
Boston,  Seattle  and  Portland  afford  good  illustrations  of  this 
point.  A  mixture  of  public  and  private  ownership  may,  of 
course,  give  the  same  result.  But  a  usual  purpose  of  public 
ownership  or  harbor  trust  management  is  to  promote  unity. 
Therefore,  partial  public  ownership  is  likely  to  lead  ultimately 
to  complete  public  ownership. 

Practically  all  the  official  and  expert  declarations  on  the 
subject  are  in  favor  of  public  or  harbor  trust  management  of 
docks.  The  only  exception  within  my  knowledge  is  the  report 

41 


made  in  1907  by  the  Massachusetts  Harbor  and  Land  Commis- 
sioners, to  which  reference  has  already  been  made. 

The  harbor  trust  idea  has  not  been  taken  up  in  this  country. 
Under  the  harbor  trust  plan  the  management  of  a  port  is  en- 
trusted to  a  group  of  men  constituting  a  legal  entity,  chosen  in 
various  ways.  Usually  a  part  of  the  number  is  chosen  by  desig- 
nated governmental  authorities  and  the  rest  elected  by  the  ship- 
ping interests  of  the  port.  The  trust  authority  borrows  money 
on  the  revenues  of  the  port  and  in  other  ways  manages  its  af- 
fairs like  a  private  corporation.  But  there  are  no  profits  either 
to  stockholders  or  to  members  of  the  board  who  direct  its  af- 
fairs. After  interest  allowance,  and  the  payment  of  expenses, 
the  surplus  revenues  are  devoted  to  improvements  or  charges 
are  lowered.  The  aim  is  merely  to  make  the  port  management 
self-sustaining.  It  will  be  seen  that  the  harbor  trust  plan  is 
really  more  akin  in  nature  to  public  ownership  than  to  private 
ownership. 

The  Harbor  Trust  Idea. 

The  savings  banks  of  the  New  England  states  and  of  New 
York  are  managed  on  somewhat  the  same  plan,  except  that  the 
trustees  of  the  savings  banks,  instead  of  being  appointed  or 
elected  as  are  the  members  of  the  British  harbor  trusts,  are  self- 
perpetuating.  But  the  savings  banks  of  New  England  and  New 
York  are  supposed  to  be  managed  solely  for  the  benefit  of  de- 
positors, without  stockholders  to  draw  dividends  and  without 
profit  to  the  directors.  The  Consumers'  Gas  Trust  Company  of 
Indianapolis  was  a  venture  along  similar  lines.  This  company 
was  organized  a  number  of  years  ago  to  supply  consumers  with 
natural  gas  at  cost.  The  stockholders  agreed  to  be  satisfied  with 
fixed  dividends  and  control  of  the  company  was  vested  in  a  self- 
perpetuating  board  of  trustees  who  managed  the  business  in  the 
interest  of  consumers,  just  as  a  British  harbor  trust  manages  a 
port  in  the  interest  of  the  shippers  and  vesselmen.  This  Indian- 
apolis arrangement  was  a  marked  success  while  it  lasted  and 
was  terminated  only  because  of  the  exhaustion  of  the  natural 
gas  supply.  Another  company  has  since  been  formed  and  au- 
thorized to  engage  in  the  artificial  gas  business  in  Indianapolis 

42 


on  the  same  lines.  Under  its  franchise  this  company  agrees, 
when  the  stockholders  have  been  repaid,  with  interest,  to  convey 
the  gas  plant  to  the  city,  to  be  owned  and  operated  or  leased  by 
it.  Mayor  Dunne's  so-called  "contract  plan"  for  dealing  with 
the  Chicago  street  railway  question  was  similar  in  essence  to  the 
British  harbor  trust  plan,  the  difference  being  that  the  "con- 
tract plan"  sought  to  vest  control  in  trustees  that  should  be 
self-perpetuating.  The  plan  of  street  railway  management 
which  Mayor  Johnson  tried  without  success  to  install  in  Cleve- 
land was  the  same  in  essence  as  Mayor  Dunne's  "contract  plan." 

While  the  harbor  trust  plan  has  worked  remarkably  well  in 
Great  Britain,  there  seems  little  likelihood  of  its  receiving  ser- 
ious consideration  in  this  country.  That  leaves  public  owner- 
ship as  the  only  alternative  to  the  various  forms  of  private  own- 
ership and  of  these  alternatives,  on  the  question  of  ultimate  pol- 
icy, the  choice  seems  clearly  to  lie  on  the  side  of  public  owner- 
ship. 

Public  ownership  is  of  two  kinds — state  and  municipal.  New 
York's  docks  are  municipal,  while  those  of  New  Orleans  and 
San  Francisco  are  administered  by  boards  appointed  by  the  gov- 
ernor of  the  state.  The  move  toward  public  ownership  in  other 
American  ports  usually  takes  the  form  of  municipal  ownership. 
Examples  are  Baltimore,  Philadelphia,  Los  Angeles  and  Oakland. 
Public  ownership  of  docks  in  Boston,  under  present  tendencies, 
means  state  ownership.  The  Harbor  Commissioners  of  Montreal 
are  a  creature  of  the  Dominion  or  federal  government.  Chi- 
cago's docks,  if  public,  would  naturally  be  municipal,  as  it  is 
the  policy  in  this  community  to  have  such  matters  attended  to 
by  the  municipal  rather  than  the  state  authorities. 

Franchise  Possibilities  Considered. 

While  the  decision  with  reference  to  dock  management  must 
be  in  favor  of  the  policy  of  ultimate  municipal  ownership,  the 
question  as  to  whether  the  docks  shall  be  built  and  owned  at 
the  outset  by  the  city  or  by  a  corporation  acting  as  the  agent 
of  the  city  is  one  of  business  judgment  to  be  decided  according 
to  the  facts  of  the  concrete  situation  presented.  The  ability  of 

43 


the  city  to  borrow  money  at  lower  rates  of  interest  than  can  a 
private  corporation  constitutes  a  strong  argument  in  favor  of 
city  ownership  at  the  outset.  Then,  too,  this  process  actually  in- 
sures city  ownership,  whereas,  if  the  docks  once  pass  into  private 
hands,  the  practical  difficulty  in  actually  securing  control  of 
them  at  any  given  time  in  the  future  may  be  great,  whatever 
the  legal  and  theoretical  possibilities  of  municipal  acquisition 
may  be.  On  the  other  hand,  with  the  borrowing  power  of  the 
city  limited,  it  may  be  desired  to  use  the  available  bond  issues 
for  other  purposes.  Some  citizens  doubtless  would  prefer  that 
public  money  be  not  risked  in  an  undertaking  that  might  be 
deemed  to  have  hazards.  Such  citizens  will  argue  that  the  in- 
terests desiring  additional  dockage  facilities,  or  willing  to  pro- 
vide them,  should  be  allowed  to  take  the  initial  steps  on  private 
capital,  leaving  the  city  in  a  position  to  come  into  possession 
later.  The  decision  of  the  question  is  likely  to  be  influenced 
much  by  the  kind  of  terms  which  a  responsible  private  corpora- 
tion desiring  to  go  into  the  dock  business  may  be  willing  to  offer. 

I  have  found  little  in  the  experience  of  other  ports  to  throw 
light  on  the  question  as  to  what  kind  of  an  arrangement  should 
be  made  with  a  private  corporation,  in  case  it  should  be  deemed 
advisable  to  provide  for  initial  development  on  a  franchise  basis. 
The  leasing  of  docks  existing  and  owned  by  a  city  does  not  fur- 
nish a  parallel  to  the  'situation  now  confronting  Chicago,  in 
which  it  is  proposed  that  a  private  corporation  be  authorized 
to  build  docks  where  none  whatever  exist  at  present.  Privately 
owned  docks  as  a  rule  are  held  under  absolute  title  of  owner- 
ship. However,  I  take  it  that  Chicago  does  not  intend  at  this 
day  to  permit  new  dock  development  in  public  waters  on  any 
such  basis. 

The  effort  of  the  city  of  Cleveland  to  work  out  an  arrange- 
ment with  a  boat  company  for  the  improvement  of  piers  on  the 
lake  front  of  that  city  may  have  some  suggestive  value  for  Chi- 
cago. The  city  of  Cleveland  owns  a  small  pier  projecting  into 
the  lake,  that  is  of  little  use  at  the  present  time.  It  was  planned 
to  lease  this  pier  for  thirty-five  years.  Although  the  lease  was 
to  be  made  only  after  taking  competitive  bids,  it  was  expected 
that  the  Detroit  and  Cleveland  Navigation  Company  would  se- 

44 


cure  the  pier.  The  understanding  was  that  this  company  should 
advance  to  the  city  $205,000  to  be  used  for  building  the  pier  and 
the  superstructure  and  also  to  do  some  street  paving.  At  the  end 
of  the  thirty-five  years  the  pier  was  to  be  the  absolute  property 
of  the  city,  with  all  the  improvements  thereon.  The  company 
was  to  agree  to  keep  the  property  in  such  condition  that  it  would 
be  worth  70  per  cent,  of  its  reconstruction  cost.  The  size  of  the 
pie*  was  to  be  750  feet  wide  and  300  feet  long.  The  city  under 
the  ordinance  as  passed  by  the  council  was  to  reserve  the  right 
"to  terminate  and  revoke  any  such  lease,  with  suitable  compen- 
sation to  the  lessee,  should  the  city  at  any  time  desire  to  change 
the  use  of  this  property,  to  reorganize  the  harbor  facilities  of 
the  city,  to  construct  lake  front  boulevards  or  parks,  or  to  carry 
out  any  other  public  purposes,  upon  giving  two  years'  notice  of 
the  intention  of  the  city  so  to  do."  The  carrying  through  of 
this  leasing  arrangement  has  been  blocked  "temporarily  by  the 
refusal  of  the  railroads  to  agree  to  make  switch  track  connec- 
tions with  the  proposed  dock,  as  the  boat  interests  are  unwill- 
ing to  go  ahead  without  assurances  upon  the  point  of  proper 
switch  track  connections. 

Features  of  Traction  Franchise  Policy. 

If  it  be  decided  to  permit  dock  development  under  a  fran- 
chise arrangement,  more  light  may  be  gained  on  this  point  from 
an  examination  of  Chicago's  own  experience  with  other  public 
utilities,  especially  the  street  railways,  than  is  to  be  secured 
from  a  study  of  ports  elsewhere. 

The  main  features  of  Chicago's  franchise  policy  as  worked 
out  in  the  traction  settlement  ordinances  are:  (1)  The  reserva- 
tion to  the  city  of  the  right  to  terminate  the  grant  at  any  time 
for  purchase  by  the  city  or  by  a  licensee  corporation;  (2)  the 
effort  to  eliminate  speculative  profits;  (3)  full  publicity  of  the 
affairs  of  the  grantee  corporation;  (4)  participation  by  the  city 
in  the  planning  and  execution  of  the  work  of  reconstruction.  Of 
these  four  features,  the  first  named  is  the  most  vital,  although 
all  are  important  and  would  seem  to  be  applicable  to  the  dock 
situation. 

45 


The  traction  question  was  before  the  community  a  long  time 
before  it  was  disposed  of,  and  the  features  of  policy  underlying 
the  final  settlement  received  long  and  careful  consideration.  The 
report  of  the  Street  Railway  Commission  submitted  to  the  city 
council  in  December,  1900,  outlined  and  discussed  the  principal 
features  of  policy  later  incorporated  in  the  traction  settlement 
ordinances,  devoting  special  attention  to  the  most  vital  one, 
that  of  the  duration  of  grants.  The  discussion  by  the  Street 
Railway  Commission  of  that  feature  of  policy  (though  consid- 
ered in  that  report  chiefly  in  relation  to  street  railways)  enunci- 
ates principles  so  pertinent  to  the  present  dock  situation  that  I 
reproduce  that  portion  of  the  document  in  question  as  an  appen- 
dix to  this  report. 

If  the  argument  of  the  Street  Railway  Commission  on  this 
point  needed  support  it  might  be  found  in  the  language  of  the 
following  excerpt  from  the  opinion  of  the  Supreme  Court  of 
the  United  States  in  the  celebrated  case  of  the  people  against 
the  Illinois  Central  Railroad,  involving  claims,  to  the  Chicago 
lake  front : 

"It  is  hardly  conceivable  that  the  Legislature  can  divest  the  state 
of  the  control  and  management  of  this  harbor  (Chicago)  and  vest  it  abso- 
lutely in  a  private  corporation.  Surely  an  act  of  the  Legislature  transfer- 
ring the  title  to  its  submerged  lands  and  the  power  claimed  by  the  railroad 
company  to  a  foreign  state  or  nation,  would  be  repudiated  without  hesita- 
tion as  a  gross  perversion  of  the  trust  over  the  property  under  which  it  is 
held.  So  would  a  similar  transfer  to  a  corporation  of  another  state.  It 
would  not  be  listened  to  that  the  control  and  management  of  the  harbor  of 
that  great  city — a  subject  of  concern  to  the  whole  people  of  the  United 
States — should  thus  be  placed  elsewhere  than  in  the  state  itself.  All  the 
objections  which  can  be  urged  to  such  attempted  transfer  may  be  urged  to 
a  transfer  to  a  private  corporation  like  the  railroad  company  in  this  case. 
Any  grant  of  this  kind  is  necessarily  revocable  and  the  exercise  of  a  trust 
by  which  the  property  was  held  by  the  state  can  be  resumed  at  any  time. 
Undoubtedly  there  may  be  expenses  incurred  in  improvements  made  under 
such  a  grant,  which  the  state  ought  to  pay;  but,  be  that  as  it  may,  the 
power  to  resume  the  trust  whenever  the  state  judges  best  is,  we  think,  in- 
controvertible. The  position  advanced  by  the  railroad  company  in  support 
of  its  claim  to  the  ownership  of  the  submerged  lands  and  the  right  to  the 
erection  of  wharves,  piers  and  docks  at  its  pleasure,  or  for  its  business  in 
the  harbor  of  Chicago,  would  place  every  harbor  in  the  country  at  the 
mercy  of  a  majority  of  the  Legislature  of  the  state  in  which  the  harbor  is 

46 


situated.  We  cannot,  it  is  true,  cite  any  authority  where  a  grant  of  this 
kind  has  been  held  invalid,  for  we  believe  that  no  instance  exists  _where 
the  harbor  of  a  great  city  and  its  commerce  have  been  allowed  to  pass 
into  the  control  of  any  private  corporation.  But  the  decisions  are  numerous 
which  declare  that  such  property  is  held  by  the  state,  by  virtue  of  its 
sovereignty  in  trust  for  the  public.  The  ownership  of  the  navigable  waters 
of  the  harbor  and  of  the  lands  under  them  is  a  subject  of  public  concern 
to  the  whole  people  of  the  state.  The  trust  with  which  they  are  held,  there- 
fore, is  governmental,  and  cannot  be  alienated  except  in  those  instances 
mentioned  of  parcels  used  in  the  improvement  of  the  interest  thus  held,  or 
when  parcels  can  be  disposed  of  without  detriment  to  the  public  interest  in 
the  lands  and  waters  remaining.  This  follows  necessarily  from  the  public 
character  of  the  property,  being  held  by  the  whole  people  for  purposes  in 
which  the  whole  people  are  interested." 

The  Nature  of  Chicago's  Terminal  Problem. 

Aside  from  the  broad  considerations  of  policy  applying  to 
public  utility  grants  generally,  there  is  a  special  reason  why  the 
arrangement  with  a  private  company  (if  one  should  be  entered 
into)  for  the  construction  and  ownership  of  docks  north  of  the 
mouth  of  the  Chicago  river  should  be  subject  to  termination  at 
any  time. 

No  one  with  faith  in  the  future  water  commerce  of  Chicago 
can  believe  that  the  docks  in  question  will  be  adequate  for  future 
needs.  It  will  be  necessary  to  provide  additional  facilities  in 
some  other  part  of  the  city.  Where,  it  is  difficult  to  say  at  this 
time.  The  problem  calls  for  further  study,  separately  and  in 
connection  with  the  railroad  terminal  problem  and  the  proposed 
Lakes-to-the-Gulf  waterway.  Chicago's  railroad  terminal  prob- 
lem calls  for  a  thorough-going  expert  inquiry  in  the  near  future. 

The  general  assembly  of  Illinois  will  not  display  wisdom  if  it 
proceeds  to  spend  $20,000,000  to  promote  waterway  development 
without  inquiring  what  the  connecting  outlet  into  Lake  Michigan 
is  to  be.  The  present  Chicago  river  cannot  be  considered  a  satis- 
factory outlet.  Possibly  a  careful  inquiry  into  this  subject  would 
lead  to  indorsement  of  the  suggestion  of  Lyman  E.  Cooley  for  a 
new  connecting  channel  between  the  Sanitary  District  canal  and 
Lake  Michigan  in  the  vicinity  of  Twenty-second  street.  In  that 
event  the  further  suggestion  of  Mr.  Cooley  that  Chicago's  future 

47 


harbor  development  should  be  along  the  Sanitary  District  canal 
might  also  meet  with  approval.  The  suggestion  of  Mr.  Isham 
Randolph  (made  in  connection  with  his  recommendation  for  a 
lake  front  harbor),  that  the  right  of  way  of  the  old  Illinois  and 
Michigan  canal  be  utilized  as  the  roadbed  of  a  belt  railroad 
joining  the  harbor  and  the  railroads,  would  fit  in  admirably  with 
the  Cooley  suggestion,  if  the  latter  be  found  by  expert  inquiry 
to  be  feasible. 

The  problem  of  proper  dock  developments  in  this  commun- 
ity presents  many  difficulties,  complexities  and  uncertainties,  and 
is  closely  related  to  other  unsolved  problems,  especially  that  of 
proper  rearrangement  of  railroad  terminals.  An  era  of  recon- 
struction and  of  tremendous  improvement  is  believed  to  be  di- 
rectly ahead  for  Chicago.  Nothing  should  be  done  that  cannot 
be  made  to  fit  into  whatever  larger  plan  may  be  worked  out.  No 
rights  should  be  created  that  will  stand  as  a  bar  to  later  -unity. 
If  the  docks  under  discussion  are  to  be  built  and  owned  by  a 
private  corporation,  it  should  be  only  on  condition  that  the 
owners  stand  ready  to  sell  at  any  time  to  the  city  or  to  another 
licensee  corporation,  thus  making  it  possible  to  correlate  the 
docks  with  other  related  undertakings,  whenever  plans  for  de- 
velopment on  a  harmonious  scale  may  be  worked  out.  The  Com- 
mercial Club,  in  its  report  on  a  plan  of  Chicago  (page  65),  sug- 
gested that  the  proposed  freight  center,  the  harbors  and  the 
connecting  transportation  systems  should  be  welded  together 
into  one  complete  machine  for  doing  the  transportation  busi- 
ness of  Chicago — "all  probably  to  be  owned  jointly  by  some 
general  utility  corporation."  This  suggestion  of  the  Commercial 
Club" report  bears  considerable  resemblance  to  the  recommenda- 
tion of  the  Massachusetts  Improvements  Commission  for  a  cor- 
poration representing  the  railroads  and  the  Commonwealth  to 
develop  and  control  the  dock  and  terminal  facilities  of  Boston. 
Chicago  should  retain  the  power  to  make  docks  hereafter  or- 
ganized become  a  part  of  this  general  utility  project,  whenever 
it  may  be  realized. 

It  would  seem  that  not  much  financial  risk  should  be  in- 
volved in  connection  with  the  construction  of  the  proposed 
docks  north  of  the  mouth  of  the  river.  Most  of  the  boat  lines 

48 


are  anxious  to  go  there,  provided  the  proper  facilities  be  ar- 
ranged for.  The  term  proper  facilities  would  include  satisfac- 
tory switch  track  and  street  car  service.  When  the  plans  have 
been  prepared  and  estimates  of  cost  made,  the  boat  line  managers 
can  be  called  in  and  asked  what  rent  they  are  willing  to  pay  for 
assignments  of  space.  The  leasing  contracts  could  be  entered 
into  in  advance  of  the  beginning  of  construction. 


49 


II. 


LEASING  POLICY, 


Under  the  head  of  leasing  policy  will  be  discussed  the  var- 
ious arrangements  under  which  boats  are  permitted  to  use  dock 
facilities.  These  various  arrangements  may  be  divided  into  three 
main  classifications. 

First,  there  is  the  leasing  system,  as  practiced  in  New  York 
city,  under  which  boat  lines  make  definite  leases  of  dock  space 
for  fixed  periods  and  during  the  life  of  the  lease  have  the  ex- 
clusive control  of  the  particular  dock  space  specified. 

Then  there  is  the  system  in  use  in  New  Orleans,  under  which 
the  charges  are  based  on  the  tonnage  capacity  of  the  vessel, 
without  regard  to  the  quantity  of  goods  moved  over  the  wharf. 
New  Orleans  makes  no  charge  whatever  against  the  goods,  but 
collects  its  entire  revenue  from  the  ship  owner. 

Galveston  and  Montreal  furnish  examples  of  the  third  sys- 
tem, under  which  no  charge  is  levied  against  the  vessel,  but  the 
entire  revenues  are  raised  by  a  schedule  of  dues  on  the  com- 
modities moving  over  the  wharf. 

Some  ports  have  a  combination  of  two  or  more  of  these  sys- 
tems. In  San  Francisco,  for  example,  there  is  a  charge  on  both 
vessel  and  goods. 

In  addition  to  the  three  types  of  charges  above  mentioned, 
there  is  often  a  special  charge  for  the  use  of  sheds,  either  in  the 
i'orm  of  sheddage  dues  or  of  fixed  rental  for  the  use  of  shed 
facilities. 

The  storage  charge  on  goods  left  on  the  pier  longer  than 
specified  periods  of  time  is  in  its  nature  akin  to  the  storage 
charge  imposed  by  warehouse  concerns. 

51 


The  New  Orleans  system  of  charges  against  the  vessel  ac- 
cording to  tonnage  capacity  is  unusual  in  this  country,  but  is 
more  common  in  foreign  ports.  The  effect  of  its  operation  is 
supposed  to  be  to  make  the  port  more  attractive  to  shippers  of 
goods,  inasmuch  as  the  goods  are  made  to  bear  no  wharfage 
charges  whatever.  The  system  in  use  in  Galveston  and  Mon- 
treal, on  the  other  hand,  is  designed  to  attract  vessel  owners  to 
the  port  inasmuch  as  it  imposes  no  burdens  upon  them  what- 
ever. Supposedly,  however,  in  the  long  run,  conditions  are 
equalized  in  the  rates  for  transportation  of  the  carriers,  both 
rail  and  water. 

Pier  Using  Privileges  Revocable. 

Eegular  line  vessels  doing  business  in  the  port  of  New  Or- 
leans have  definite  dock  space  assigned  to  them  which  is  held 
for  them  exclusively  so  long  as  they  are  able  to  make  full  use 
of  the  space.  It  is  the  policy  of  the  port  authorities  of  New 
Orleans  to  give  boat  companies  no  contract  rights  for  fixed  per- 
iods of  time  for  the  use  of  dock  space.  Assignments  of  space  or 
agreements  for  the  use  thereof  are  subject  to  revocation  by  the 
port  authorities  at  any  time.  In  case  berth  space  which  has 
been  assigned  to  a  particular  boat  company  is  hot  occupied  by 
the  boats  of  that  company  at  any  given  time,  the  port  authori- 
ties reserve  the  right  to  dock  some  other  vessel  at  that  point 
and  this  right  is  frequently  exercised.  Where  shed  facilities  are 
furnished  there  is  an  additional  charge  based  likewise  upon  the 
tonnage  of  the  vessel.  In  cases  where  the  port  authority  was 
unable  to  provide  sheds  and  the  boat  companies  advanced  the 
funds,  they  were  given  in  return  preferential  rights  to  the  dock 
space  in  question  until  such  time  as  the  loan,  without  interest, 
should  be  repaid,  all  of  the  sheddage  charge  and  25  per  cent,  of 
the  wharfage  charge  being  devoted  to  such  repayment. 

Galveston  and  Montreal  have  schedules  of  charges  for  mov- 
ing goods  across  the  wharf,  either  to  or  from  the  boat,  that  are 
much  like  the  tariff  schedules  of  a  railroad  company.  These 
schedules  provide  for  different  rates  for  different  classes  of 
goods.  The  charge  on  cotton,  for  example,  in  Galveston,  is  1J 
cents  per  100  pounds.  In  both  Galveston  and  Montreal,  as  in 

52 


New  Orleans,  definite  assignments  of  space  are  made  to  regular 
boat  lines,  but  none  of  these  assignments  has  a  fixed  tiffieTlura- 
tion.  They  are  revocable  at  the  will  of  the  port  authority  and 
where  the  space  is  not  utilized  to  the  full  limit  of  its  capacity 
the  port  management  reserves  the  right  to  put  in  other  vessels. 
There  are  special  charges  on  a,  rental  basis  on  account  of  shed- 
dage. 

The  charges  collected  by  the  port  authority  of  San  Francisco 
are  termed  dockage,  tolls,  and  wharfage.  Dockage  is  the  charge 
against  a  vessel  for  occupying  a  berth.  The  rates  vary  according 
to  the  class  and  size  of  the  vessel.  Tolls  are  the  charges  made 
for  merchandise  passing  over  the  state  wharves.  The  rate  is  5 
cents  a  ton,  except  on  a  few  commodities  such  as  lumber  and 
brick,  for  which  there  are  different  rates.  Wharfage  in  the  port 
of  San  Francisco  is  defined  as  the  charge  made  for  leaving  mer- 
chandise on  state  premises  longer  than  the  time  specified  in  the 
rules.  In  most  ports  this  is  called  storage  and  the  term  wharf- 
age is  used  to  define  what  are  called  tolls  in  San  Francisco.  As 
in  New  Orleans,  Galveston  and  Montreal,  so  it  is  the  policy  of 
the  port  authorities  in  San  Francisco  to  make  no  assignments  of 
space  and  to  give  no  rights  of  occupation  or  use  of  piers  that 
are  not  revocable  at  any  time.  Recently  an  exception  has  been 
made  to  this  policy  as  a  means  of  securing  the  construction  of 
much  needed  sheds  with  the  aid  of  private  capital.  Where  the 
lessee  of  a  dock  would  agree  to  put  up  a  shed  with  his  own 
money,  the  harbor  authorities  have  given  definite  term  leases, 
not  to  exceed  fifteen  years  in  length,  on  condition  that  the  shed 
become  the  property  of  the  harbor  commissioners  at  the  ex- 
piration of  the  lease. 

While  the  charges  made  by  the  harbor  commissioners  in  the 
port  of  San  Francisco  are  very  moderate,  the  pilotage  dues  and 
the  stevedoring  and  teaming  charges  are  so  heavy  as  to  make 
the  handling  of  goods  through  the  port  of  San  Francisco  rather 
expensive. 

In  Seattle,  Vancouver,  Tacoma  and  Portland  the  schedules  of 
charges  are  very  simple.  The  prevailing  rate  on  commodities  for 
the  privilege  of  using  the  wharf  is  50  cents  a  ton,  with  no  charges 

53 


against  the  vessel.  Different  rates  are  provided  for  special 
classes  of  commodities.  In  many  cases  the  boat  line  owns  or 
leases  its  pier,  or  if  it  is  engaged  in  interchange  traffic  with. a 
railroad,  uses  the  railroad  company's  pier.  In  Boston,  Phila- 
delphia, Baltimore,  Norfolk  arid  in  the  lake  cities  the  boat  lines 
commonly  use  railroad  piers  or  own  or  lease  their  piers  and  such 
charges  as  dockage  or  wharfage  do  not  appear. 

The  Policy  of  Railroads  as  Pier  Owners. 

Where  a  railroad  company  owns  dock  facilities  there  is  com- 
monly no  charge  whatever,  either  against  the  boat  or  upon  the 
goods  that  have  a  rail  haul.  But  upon  goods  not  having  a  rail 
haul  there  is  a  toll  or  wharfage  charge  just  as  there  is  in  Gal- 
veston.  The  charges  imposed  by  a  railroad  company  upon  goods 
not  having  a  rail  haul  are  likely  to  be  rather  high.  The  railroad 
companies  doing  business  in  San  Francisco  absorb  the  toll  of  5 
cents  a  ton  on  commodities  carried  by  rail  to  or  from  competi- 
tive railroad  points.  To  non-competitive  points  the  railroads 
terminating  in  San  Francisco  do  not,  absorb  the  toll  imposed  on 
the  goods  by  the  harbor  commissioners  of  San  Francisco,  but 
add  the  toll  to  the  freight  rate. 

Passenger  boats  doing  an  extensive  business  ordinarily  have 
leasing  arrangements  for  the  use  of  the  pier  space  which  they 
require.  The  lesser  excursion  boats  are  commonly  charged  so 
much  a  day  or  a  month  or  a  season,  the  charge  being  based 
roughly  on  the  size  of  the  boat  and  the  amount  of  business  done. 

New  York's  Pier  Leasing  Policy. 

I  have  reserved  the  New  York  situation  for  separate  and 
more  extended  treatment  because  it  seems  to  serve  as  an  exam- 
ple of  unwise  policy. 

There  are  a  few  "open"  piers  in  New  York  city,  usually  un- 
shedded,  at  which  boats  may  tie  up  and  load  or  unload  upon  the 
payment  of  wharfage.  These  piers  are  few  in  number  and  are 
used  for  the  most  part  only  by  canal  boats  and  sailing  vessels. 
Steamboats  would  not  think  of  depending  upon  the  open  piers 
in  New  York  city  for  accommodations.  Nearly  all  the  munic- 

54 


ipal  piers  in  New  York  harbor  are  used  under  leases  of  varying 
terms  and  conditions. 

From  the  establishment  of  the  dock  department  in  1870,  to 
1902,  pier  leases  were  made  by  the  board  of  dock  commissioners, 
consisting  first  of  five  and  later  of  three  members.  By  charter 
legislation  of  1901,  effective  January  1,  1902,  the  dock  depart- 
ment was  made  a  single  headed  department.  The  commissioner 
of  docks  was  authorized  to  make  pier  leases,  but  leases  of  more 
than  one  year's  duration  must  have  the  approval  of  the  board  of 
sinking  fund  commissioners.  Neither  the  board  of  aldermen 
nor  the  board  of  estimate  and  apportionment  have  anything  to 
do  with  pier  leasing  policy.  Revocable  permits  and  leases  for 
Jess  than  a  year  are  made  by  the.  dock  commissioner  on  his  own 
authority.  Pier  leases,  once  obtained,  may  be  transferred  or 
sublet  with  the  sanction  of  the  dock  commissioner.  There  is 
no  requirement  for  publicity  with  reference  to  sub-leases  or 
transfers.  The  dock  commissioner  in  practice  ordinarily  gives 
his  consent  without  knowing  the  detailed  terms  of  the  sub-lease 
or  transfer.  Speculative  traffic  in  leases  might  be  going  on  for 
all  the  dock  commissioner  or  the  public  is  aware.  It  is  gossip 
that  there  is  much  speculation  in  leases  and  that  fortunate  in- 
dividuals or  companies  make  large  sums  of  money  by  transfer- 
ring at  large  advances  leases  to  municipal  piers.  The  law  pro- 
vides that  leases  may  be  made  for  ten  year  periods  with  the 
privilege  in  the  lessee  of  not  to  exceed  four  renewals  of  ten  years 
each,  or  fifty  years  in  all.  The  leases  must  be  let  by  public  auc- 
tion unless  the  board  by  unanimous  consent  decides  that  com- 
petitive leasing  is  not  expedient.  In  practice,  public  letting  "has 
almost  entirely  disappeared. 

In  the  history  of  the  dock  department  there  have  been  very 
few  instances  of  fifty  year  leases  of  water  front  property  and 
these  were  for  industrial  rather  than  for  navigation  purposes. 
The  leases  to  boat  lines  are  ordinarily  of  twenty  years'  or  thirty 
years'  duration — that  is,  a  ten  year  lease  with  the  right  to  a  re- 
newal of  one  or  two  periods  of  ten  years  each. 

There  seems  to  be  no  settled  basis  of  ascertaining  the  amount 
of  rental  to  be  charged  for  piers.  As  a  matter  of  fact  the  rates 
of  rental  for  piers  of  substantially  the  same  value  vary  widely. 

55 


It  is  impossible  to  avoid  the  conclusion  that  influence,  polit- 
ical and  otherwise,  has  been  a  factor  in  the  leasing  policy  of  the 
New  York  Dock  Department.  Moreover,  this  influence  has  been 
exerted  at  times  in  a  manner  detrimental  to  the  interests  of 
shipping  and  of  the  public. 

The  most  conspicuous  instance  is  afforded  by  the  ice  trust 
scandals  of  the  Van  Wyck  administration.  It  was  largely  through 
the  favoritism  of  the  dock  department  that  the  so-called  ice  trust 
was  enabled  to  get  such  a  strong  hold  upon  the  situation  at  that 
time.  Many  instances  can  be  cited  of  politicians  securing  leases 
to  pier  space  devoted  to  dump  uses  for  less  than  market  value 
of  the  space.  If  such  leases,  instead  of  being  definite  term  con- 
tracts for  fixed  periods  of  considerable  length,  were  revocable 
at  will,  any  serious  abuses  that  might  develop  could  be  easily 
remedied. 

Case  of  the  Enterprise  Transportation  Company. 

The  possibility  of  favoritism  by  the  dock  department  may 
signify  much  with  reference  to  the  matter  of  railroad  control 
of  water  transportation.  Under  the  Van  Wyck  administration, 
Charles  W.  Morse,  then  at  the  head  of  the  ice  trust  and  also  in- 
terested in  many  boat  companies,  seemed  to  be  able  to  get  a 
large  number  of  leases  for  the  boat  companies  in  which  he  was 
interested.  Under  the  present  administration  the  remnant  of 
the  Morse  boat  holdings  appear  to  have  difficulty  in  securing 
pier  accommodations.  The  New  York,  New  Haven  and  Hart- 
ford Eailroad  Company,  which  how  controls  all  the  steamship 
lines  operating  on  Long  Island  Sound  except  the  Morse  line,  the 
Metropolitan  SteamsSip  Company,  operating  the  Harvard  and 
the  Yale  between  Boston  and  New  York  direct,  has  of  late  been 
securing,  either  directly  or  through  its  constituent  companies,  a 
considerable  number  of  leases  to  desirable  dock  property.  It 
looks  very  much  as  if  the  New  York  dock  department,  whether 
knowingly  or  unknowingly  is  not  for  me  to  say,  has  pursued  a 
policy  that  was  calculated  to  enable  the  New  York,  New  Haven 
and  Hartford  Railroad  Company  to  drive  competitors  out  of 
business. 

The    history    of    the    Enterprise     Transportation    Company 

56 


serves  to  substantiate  this  statement.  This  was  a  small 
company  that  undertook  to  conduct  a  transportation  lme~  be- 
tween New  York  and  Boston,  by  way  of  Fall  River.  The  Enter- 
prise Transportation  Company  had  the  very  greatest  difficulty 
in  getting  dock  accommodations  of  any  kind  in  New  York  city. 
One  pier  that  it  had  was  taken  away  from  it  for  purposes  of  re- 
construction. It  then  sought  to  secure  a  lease  to  the  newly  con- 
structed Pier  28  in  the  East  river.  The  pier  which  it  desired 
was,  on  June  20,  1906,  leased  to  the  Joy  Steamship  Company,  a 
New  York,  New  Haven  and  Hartford  concern,  for  $42,000  a 
year.  This  is  by  far  the  highest  rental  paid  for  pier  space  on 
the  East  river  and  amounts  to  more  per  square  foot  than  is  paid 
in  most  instances  on  the  North  river,  where  dock  space  is  sup- 
posed to  be  much  more  valuable.  After  the  pier  had  been  leased 
to  the  Joy  Steamship  Company  it  laid  practically  unused  for  a 
long  time,  thus  tending  to  substantiate  the  accusation  that  the 
high  rental  was  paid  by  the  New  York,  New  Haven  and  Hart- 
ford interests,  not  for  the  use  of  the  pier,  but  to  prevent  its 
use  by  a  rival.  After  much  difficulty  the  Enterprise  company 
managed  to  lease,  at  a  large  rental,  half  a  pier  from  another  con- 
cern that  did  not  need  all  its  space.  The  Enterprise  Transporta- 
tion Company  continued  in  business  for  some  time  and  main- 
tained considerably  lower  rates,  both  for  passengers  and  freight, 
than  the  competing  boats  of  the  New  York,  New  Haven  and 
Hartford  Railroad  Company's  boat  lines,  thus  benefiting  ship- 
pers. But  it  had  to  meet  the  continued  opposition  of  the  rail- 
road interests  in  many  ways.  For  instance,  the  New  York,  New 
Haven  and  Hartford  steamship  lines  could  get  a  through  rate 
with  the  Pennsylvania  Company  much  lower  than  could  be  se- 
cured over  the  Enterprise  route.  This  matter  was  several  times 
called  to  the  attention  of  the  Interstate  Commerce  Commission, 
which  body  in  one  of  its  reports  said : 

"In  an  investigation  entitled  'In  the  matter  of  alleged  discrimination 
against  the  Enterprise  Transportation  Company  b.y  railroad  lines  leading 
from  New  York  City7  (11  I.  C.  C.  Kep.  587)  it  was  shown  that  railroad  lines 
west  from  New  York  City  made  joint  through  rates  with  the  New  England 
Navigation  Company,  controlling  the  Fall  River  line  of  steamers,  which 
plies  between  New  York  and  Fall  River,  Mass.,  and  some  other  New  Eng- 
land cities,  and  also  controlling  other  important  steamer  lines  operating  on 

57 


Long  Island  Sound.  Such  joint  rates  applied  in  both  directions  between 
Western  and  New  England  points.  The  New  England  Navigation  Company 
is  owned  and  operated  by  the  New  York,  New  Haven  and  Hartford  Bail- 
road  Company.  The  rail  lines  centering  in  New  York  and  running  westerly 
thereof  refused,  for  stated  business  reasons,  to  make  the  like  or  any  joint 
rating  arrangement  with  the  Enterprise  Transportation  Company,  a  steam- 
ship line  pyling  between  Fall  River  and  other  New  England  points  and  New 
York  City  and  in  competition  with  the  New  England  Navigation  Com- 
pany's Fall  Eiver  line. 

"It  appeared  that  the  Fall  River  line  might,  by  reducing  rates  on 
local  traffic  force  out  of  business  the  Enterprise  Transportation  Company, 
while  obtaining  a  lucrative  and  supporting  business  from  the  through  traffic, 
and  upon  disappearance  of  such  competition  restore  the  former  charges. 
The  existence  of  the  Enterprise  Transportation  Company  as  a  competitive 
factor  was  of  distinct  value  to  the  public,  and  that  existence  might  depend 
upon  its  right  to  engage  in  through  business.  This  investigation  was  made 
by  the  Commission  with  the  understanding  that  it  was  without  power  to 
grant  any  relief,  and  no  opinion  as  to  whether  the  through  routing  arrange- 
ment should  have  been  extended  to  the  Enterprise  Transportation  Company 
was  expressed;  but  the  Commission  expressed  the  opinion  that  if  the  pub- 
lic is  to  have  the  legitimate  benefit  of  water  competition  it  is  evident  that 
authority  should  be  provided  to  establish  through  routes  between  rail  and 
water  carriers,  or  at  least  to  prevent  unjust  discrimination  by  rail  carriers 
between  connecting  water  lines." 

After  the  amendment  of  the  Interstate  Commerce  law  this 
charge  of  discrimination  against  the  Enterprise  Transportation 
Company  was  again  brought  before  the  Interstate  Commerce. 
Commission  and  an  order  was  issued  requiring  the  Pennsylvania 
railroad  to  make  reasonable  through  route  and  joint  rate  ar- 
rangements with  the  Enterprise  Company.  But  before  this  or- 
der actually  became  operative  the  Enterprise  Company  gave  up 
the  struggle  and  went  out  of  business  in  the  fall  of  1907. 

On  the  very  same  day  on  which  Pier  28  in  the  East  river  was 
leased  by  the  dock  authorities  to  the  Joy  Steamship  Company 
at  an  exceptionally  high  rental,  thus  keeping  it  out  of  the  hands 
of  the  Enterprise  Transportation  Company,  the  dock  authorities 
made  leases  of  valuable  dock  space  in  the  North  river  to  certain 
transatlantic  lines  and  justified  the  very  low  rental  on  the 
grounds  that  it  was  the  duty  of  the  dock  authorities  to  encour- 
age commerce.  But  vessel  interests  engaged  in  coastwise  ship- 

58 


ping  business  in  opposition  to  railroad  controlled  boats  have 
not  shared  in  that  encouragement.  It  is  predicted  by  some  that 
the  Metropolitan  Steamship  Company,  not  under  railroad  con- 
trol, will  have  very  great  difficulty  in  securing  dock  accommo- 
dations in  New  York  harbor  next  year  unless  it  makes  terms 
with  the  New  York,  New  Haven  and  Hartford  railroad  interests. 

The  Evil  of  Definite  Term  Leases. 

The  greatest  objection  to  private  ownership  of  dock  facilities 
is  that  the  private  owners  may  use  their  control  to  suppress 
competition  and  promote  monopoly.  A  study  of  the  New  York 
situation  indicates  that  public  ownership  under  the  system  of 
long  term  leases  may  be  productive  of  the  same  evil,  but  to  a 
lesser  degree.  Private  ownership,  being  perpetual,  would  tend 
to  make  the  abuses  perpetual.  But  under  public  ownership,  and 
with  the  leasing  system  in  use  in  New  York  city,  the  leases  will 
expire  in  twenty  or  thirty  years  at  the  outside  and  thus  enable 
the  public  in  the  course  of  time  to  regain  control.  If  all  leases 
to  piers  in  the  harbor  of  NewT  York  were  subject  to  revocation 
at  any  time,  as  is  the  policy  in  New  Orleans,  San  Francisco, 
Montreal,  Liverpool,  Glasgow  and  many  other  European  ports, 
the  evils  I  have  pointed  out  in  the  New  York  situation  would  not 
develop,  or  if  they  did,  could  be  easily  remedied.  The  railroads 
are  popularly  supposed  to  be  very  influential  in.  the  politics  of 
California,  yet  I  was  unable  to  find  any  criticism  that  the  Har- 
bor Commissioners  in  San  Francisco,  where  pier  leases  are  revoc- 
able at  will,  have  used  their  power  to  suppress  independent  boat 
lines  engaged  in  business  in  competition  with  railroad-owned 
boat  lines,  although  the  struggle  of  the  railroads  for  the  control 
of  all  coastwise  shipping  business  is  in  evidence  on  the  Pacific 
as  well  as  on  the  Atlantic  seacoast. 

The  pier  space  in  New  York  is  not  utilized  to  the  best  ad- 
vantage. The  railroads  have  more  of  the  pier  space  than  they 
really  need.  Several  boat  lines  have  piers  devoted  to  their  own 
exclusive  use  and  do  not  have  the  business  to  keep  the  piers 
occupied  all  the  time.  Many  of  these  piers  could  accommodate 
more  boats.  Yet,  while  this  is  true,  shipping  is  kept  out  of  New 
York  city  because  of  inability  to  secure  dock  facilities.  This  is 

59 


especially  true  of  boats  that  would  like  to  engage  in  the  coast- 
wise traffic.  If  all  leases  to  municipal  piers  in  the  harbor  of 
New  York  were  revocable  at  any  time,  as  in  New  Orleans,  San 
Francisco  and  Montreal,  the  harbor  authorities  could  make  a 
rearrangement  which  would  permit  the  accommodation  of  boat 
lines  that  are  now  excluded. 

As  Chicago's  study  of  the  street  railroad  question  led  to  the 
conclusion  that  all  franchises  to  street  railway  companies  should 
be  subject  to  termination  at  any  time,  so  a  study  of  the  dock 
problem  here  and  elsewhere  must  lead  to  the  conclusions :  First, 
that  if  the  docks  are  developed  and  owned  in  first  instance  by  a 
private  corporation,  the  franchise  should  be  subject  to  termina- 
tion at  any  time;  and  second,  that  the  leases  to  the  boat  com- 
panies for  dock  space  should  likewise  be  subject  to  revocation 
at  any  time,  or  on  short  notice. 

The  only  excuse  offered  in  New  York  for  leases  of  twenty 
years'  or  thirty  years'  duration  is  that  the  lessee  usually  is  re- 
quired to  build  a  shed  upon  the  pier  and  that  as  the  shed,  at  the 
end  of  the  lease,  becomes  the  property  of  the  city,  the  lessee 
must  have  a  sufficient  guaranteed  time  to  insure  his  getting  his 
value  out  of  the  shed.  There  are  two  ways  of  meeting  this  ob- 
jection. Either  the  city  should  build  the  shed  as  well  as  the 
dock  in  first  instance,  or  the  city  in  reserving  the  right  to  term- 
inate the  lease  should  provide  for  reasonable  payment  to  the 
lessee  on  account  of  the  shed,  in  case  of  revocation. 

Recommendation  for  Chicago. 

Possibly  at  the  outset  in  Chicago  it  might  be  expedient  to 
compromise  and  provide  that  leases  should  have  ten  years  of 
definite  duration  and  after  that  be  subject  to  revocation  at  will. 

Baltimore  started  out  with  the  policy  of  making  fifty  year 
leases.  As  in  New  York,  this  policy  was  justified  because  the 
lessee  erected  the  shed  and  it  was  deemed  necessary  on  this  ac- 
count to  give  long  guaranteed  time  to  enable  the  lessee  to  get  the 
value  of  his  shed  back.  The  engineer  in  charge  of  harbor  work 
announces  that  he  intends  to  recommend  city  construction  of 
sheds  as  well  as  piers  in  the  future,  thus  doing  away  with  the 
necessity  for  long  term  leases.  Outside  of  New  York  and  Balti- 

60 


more,  leases  of  definite  term  duration  generally  are  for  periods 
of  not  more  than  twenty  years  and  frequently  the  period  is  much 
shorter  than  twenty  years.  In  Boston  private  dock  owners  in 
numerous  cases  make  twenty  year  leases.  The  arrangements 
which  the  Boston  and  Maine  railroad  make  with  boat  companies 
for  the  use  of  docks  are  generally  limited  to  five  years.  The 
Massachusetts  Harbor  and  Land  Commissioners  make  no  leases 
of  dock  space  for  longer  than  fifteen  years.  In  Seattle  the  North- 
ern Pacific  Railroad  Company  makes  twenty  year  leases,  but 
provides  for  revaluation  and  change  of  rental  every  five  years. 
The  Canadian  Pacific  Railroad  Company  in  Vancouver  makes 
twenty  year  leases  which  are  subject  to  termination  at  the  will 
of  the  company.  The  leasing  arrangements  of  the  Chicago,  Mil- 
waukee and  S>t.  Paul  railroad  with  the  boat  companies  for  the 
use  of  railroad  docks  in  the  port  of  Milwaukee  are  usually  for 
five  year  periods.  The  Bush  Terminal  Company  in  New  York 
makes  no  leases  for  longer  than  ten  years.  It  is  argued  by  offi- 
cials of  this  company  that  ten  years  is  about  as  long  as  condi- 
tions can  be  foreseen  with  any  degree  of  accuracy. 

Whatever  leasing  policy  the  city  might  deem  wise  for  itself 
it  would  naturally  expect  a  corporation  developing  docks  under 
a  franchise  to  follow.  If  the  rights  of  shippers  and  vesselmen 
are  to  be  safeguarded  under  a  system  of  private  ownership  of 
docks,  provision  must  be  made  for  continuing  public  control  of 
dock  management,  including  supervision  of  leasing  policy. 

I  have  assumed  that  the  system  of  leasing  pier  space  to  boat 
owners,  as  distinguished  from  systems  of  dockage  or  wharfage 
charges,  would  be  followed  in  Chicago,  as  that  system  is  the 
simplest  and  is  the  one  with  which  the  shipping  interests  of  the 
Great  Lakes  are  most  familiar.  It  should  be  the  policy  of  the 
city,  however,  to  have  at  all  times  some  unleased  pier  space  at 
which  occasional  boats  may  load  and  unload.  For  the  use  of 
such  piers  it  would  be  most  convenient,  perhaps,  to  provide  a 
schedule  of  wharfage  dues,  after  the  manner  of  Galveston,  im- 
posing a  charge  of  so  much  a  ton  on  goods  moved  over  the  pier. 
For  passenger  boats  not  having  regular  leased  pier  space  it 
would  be  necessary  to  devise  a  system  of  charges  based  probably 
on  the  size  of  the  boat. 

61 


m. 


THE  IMPORTANCE   TO   CHICAGO   OF  THE   PAS- 
SENGER, PACKAGE  FREIGHT,  AND  FRUIT 
AND  VEGETABLE  BUSINESS. 


Although  considerable  attention  was  given  to  this  phase  of 
the  subject  in  the  report  of  the  Harbor  Commission,  it  may  be 
well  to  point  out  again  in  the  present  connection  the  importance 
to  Chicago  of  the  passenger,  package  freight,  and  fruit  and  veg- 
etable business.  In  earlier  stages  of  development  the  great  raw 
materials  and  bulk  commodities  constitute  the  larger  part  of 
the  water  traffic  of  any  port.  But  as  communities  progress  other 
forms  of  traffic  grow  in  comparative  importance. 

Chicago  could  have  a  much  lager  water  traffic  in  the  miscel- 
laneous cargo  line  if  it  would  but  provide  better  accommoda- 
tions for  handling  such  articles  of  commerce.  Better  facilities, 
no  doubt,  would  greatly  encourage  passenger  traffic  on  the  lakes. 
The  development  of  such  traffic  signifies  much  for  the  health 
and  pleasure  of  our  own  inhabitants  and  makes  the  city  a  much 
more  attractive  place  for  visitors. 

Better  facilities  for  handling  fruit  and  vegetables  are  sorely 
needed  in  Chicago.  Increase  of  traffic  and  better  service  to  con- 
sumers should  follow  improvement  of  facilities  for  handling  this 
class  of  business. 

Some  figures  may  help  us  to  understand  the  importance  of 
the  package,  or  unclassified  freight  movement.  The  freight 
movement  of  81,000,000  tons  on  the  Great  Lakes  in  1907  is  classi- 
fied approximately  as  follows  : 


63 


Per  cent. 

Iron  ore  and  other  minerals  (except  coal) 58 

Lumber    

Grain  and  grain  products 7 

Hard  coal    5 

Soft  coal 19 

Unclassified,   including  merchandise,   fruits   and 

vegetables 8 


Total 100 

It  will  be  seen  from  the  foregoing  table  that  for  the  Great 
Lakes  as  a  whole  the  percentage  of  unclassified  freight  is  greater 
than  that  of  hard  coal,  grain  and  grain  products,  or  lumber.  For 
Chicago  the  percentage  of  unclassified  freight  to  the  total  freight 
handled  in  the  port  is  higher  than  that  for  the  Great  Lakes  as  an 
entirety.  The  receipts  and  shipments  of  the  port  of  Chicago 
(including  both  the  Chicago  and  Calumet  harbors)  for  1907  were 
11,410,470  net  tons.  Of  this  sum  the  receipts  were  8,564,754  and 
the  shipments  2,845,716  net  tons.  The  receipts  and  shipments 
by  water  in  the  port  of  Chicago  in  the  year  1907  may  be  classi- 
fied in  percentages  as  follows : 

Receipts,  Shipments, 
per  cent.       per  cent. 

Iron  ore  and  other  minerals  (except  coal) .  .   62.35  .63 

Lumber 8.58  .07 

Grain  and  grain  products 21  72.00 

Coal  (both  hard  and  soft) 16.51  4.03 

Unclassified                                                               12.35  23.27 


Total    100.00  100.00 

The  following  extract  from  the  report  submitted  by  me  to 
the  Chicago  Harbor  Commission  last  year  gives  some  figures 
designed  to  indicate  that  the  unclassified  freight  movement  is 
of  much  more  value  than  might  be  inferred  from  the  compara- 
tive tonnage  statistics : 

"With  respect  to  lines  of  lake  commerce,  Chicago fs  interest  would 
seem  to  lie  most  in  the  direction  of  increasing  the  package  freight  or  mis- 
cellaneous cargo  business. 

"Iron  ore,  which  constitutes  about  one-half  the  total  tonnage  of  lake 
commerce,  is  little  seen  in  the  Chicago  harbor.  Nor  do  we  care  for  it  there. 
The  great  blast  furnaces  do  not  belong  in  the  center  of  the  city.  They  are 

64 


better  located  for  all  concerned  where  they  are,  at  South  Chicago,  Indiana 
Harbor  and  Gary. 

"Chicago  is  still  the  world's  greatest  lumber  market,  although  the 
arrivals  by  water  have  greatly  decreased.  The  water  business  is  stiH  of  im- 
portance, however,  and  many  lumbermen  think  the  present  volume  of  busi- 
ness may  be  maintained  for  a  generation  or  more.  At  any  rate,  it  is  im- 
portant that  the  city  have  facilities  for  handling  such  quantity  of  lumber 
as  may  continue  to  come  here,  even  though  no  increase  may  be  looked  for, 
owing  to  the  disappearance  of  the  timber  supply  at  points  available  for 
water  transportation.  '.The  place  where  the  lumber  is  wanted  appears  to  be 
the  Chicago  river  and  not  the  Calumet.  For  the  year  1907  Chicago  re- 
ceived in  round  numbers  2,400,000,000  feet  of  lumber,  of  which  400,000,000 
feet,  or  one-sixth,  came  by  water.  Not  many  years  ago  the  receipts  of  lum- 
ber by  water  greatly  exceeded  those  by  rail. 

"The  coal  unloading  facilities  in  the  Chicago  river  are  not  as  good  as 
at  other  leading  lake  ports.  Perhaps  they  are  as  good  as  are  warranted  by 
the  condition  of  the  harbor.  Eiver  improvement  might  be  expected  to  lead 
to  the  introduction  of  better  unloading  facilities.  While  the  Calumet  river 
may  answer  as  a  trans-shipping  point,  it  cannot  meet  the  needs  of  Chicago 
proper  as  a  receiving  point  for  coal  for  consumption  in  this  city. 

"The  number  of  grain  elevators  on  the  Chicago  river  is  growing  smal- 
ler. As  elevators  have  been  destroyed  by  fire  or  other  cause  they  have  not 
been  rebuilt.  The  center  of  the  wheat  trade  is  moving  westward  and  north- 
ward away  from  Chicago.  The  city,  however,  while  it  does  not  lead  in 
wheat,  is  still  the  world's  greatest  grain  market.  The  center  of  the  corn 
supply  is  not  likely  to  move  away.  Much  of  the  grain  storage  of  the  city 
is  on  the  Calumet  river.  Except  for  one  consideration  it  might  be  a  matter 
of  indifference  to  the  community  at  large  whether  the  grain  center  be  on 
one  river  or  the  other,  apart  from  the  question  of  preserving  investments 
already  made.  That  consideration  has  to  do  with  the  encouragement  of  the 
package  freight  business.  While  the  total  volume  of  freight  east  is  greater 
than  the  volume  west,  more  package  freight  moves  west  than  east.  The 
package  boats,  therefore,  need  grain  cargoes  east,  in  part  at  least.  And  as 
most  of  the  package  freight  comes  into  Chicago  rather  than  the  Calumet 
river,  it  is  highly  important  that  there  be  elevators  in  the  Chicago  harbor 
to  supply  the  package  boats  with  their  return  cargoes  of  grain.  These 
boats  would  find  it  disadvantageous  to  be  obliged  to  go  to  South  Chicago 
for  grain,  especially  for  partial  cargoes,  after  unloading  in  the  Chicago 
river.  This  constitutes  an  argument  for  encouraging  at  least  a  considerable 
number  of  grain  elevators  to  stay  in  the  Chicago  harbor. 

"Because  iron  ore,  grain,  coal  and  lumber  constitute  the  principal  vol- 
ume by  weight  of  lake  commerce,  it  is  assumed  in  some  quarters  that  they 
alone  are  worthy  of  serious  consideration.  The  package  freight  or  miscel- 
laneous carim  business,  however,  is  of  very  great  importance.  The  great 

65 


dry  goods  and  grocery  houses  of  Chicago  actually  bring  in  enormous  quanti- 
ties of  merchandise  by  water.  The  ability  to  do  so  constitutes  the  principal 
reason  for  the  pre-eminence  of  this  city  as  a  wholesale  and  jobbing  center. 
It  is  difficult  to  obtain  precise  information  as  to  the  volume  and  value  of 
this  traffic,  because  facts  of  this  nature  are  not  freely  given  to  the  public 
by  concerns  engaged  in  keen  competition  with  one  another. 

"From  the  record  and  decision  of  the  Interstate  Commerce  Commission 
in  the  case  of  Wyman,  Partridge  &  Co.  and  others  against  certain  lake 
and  rail  carriers,  docket  No.  1126,  certain  specific  information  is  obtainable 
with  reference  to  the  business  of  Wyman,  Partridge  &  Co.  of  Minneapolis  and 
Marshall  Field  &  Co.  of  Chicago.  For  the  year  1905  the  latter  firm  brought 
into  Chicago  by  lake  approximately  18,000  tons  of  merchandise,  having  an 
invoice  value  at  points  of  shipment  of  about  $12,000,000.  The  lake  and  rail 
receipts  of  Wyman,  Partridge  &  Co.  for  the  same  year  were  6,000  tons,  of  an 
invoice  value  of  $3,000,000. 

"The  receipts  of  unclassified  freight  in  the  port  of  Chicago — including 
Chicago  and  South  Chicago — for  the  year  1905  were  1,098,054  tons.  The 
shipments  were  640,042  tons.  Of  the  receipts  of  1,098,054  tons,  the  18,000 
tons  belonging  to  Marshall  Field  &  Co.  represented  a  value  of  $12,000,000. 
The  total  hard  coal  receipts  at  Chicago  and  South  Chicago  for  the  year 
1905  were  884,057  net  tons.  At  Buffalo  September  prices,  $4.91  a  ton,  this 
coal  was  worth  $4,330,719.87,  or  only  a  little  more  than  one-third  the  invoice 
value  of  Marshall  Field's  receipts  by  lake  for  the  same  year.  The  wheat 
shipments  by  lake  from  Chicago  for  1905  were  small,  only  5,498,868  bushels. 
But  the  larger  shipments  of  1907,  14,448,231  bushels,  had  less  value  than  the 
receipts  of  Marshall  Field  for  1905.  The  corn  shipments  of  1905  were  44,- 
939,308  bushels.  At  40  cents  a  bushel  the  value  of  this  corn  would  be  only 
about  50  per  cent  more  than  the  Marshall  Field  receipts  by  lake.  The  lum- 
ber receipts  by  lake  for  1905  were  423,993  thousand  feet.  At  $20  a  thou- 
sand, a  high  price,  this  lumber  would  have  only  two-thirds  the  value  of  the 
Marshall  Field  lake  receipts.  The  iron  ore  brought  into  the  port  in  1905, 
principally  in  South  Chicago,  amounted  to  3,324,320  tons.  At  $2  a  ton  this 
ore  would  have  only  a  little  more  than  half  the  value  of  the  Marshall  Field 
receipts. 

"The  entire  value  of  Duluth's  traffic  for  1905  was: 

' '  Eeceipts $31,849,509 

' '  Shipments 74,065,789 


"Total $105,915,298 

"The  value  figures  for  Chicago's  receipts  and  shipments  are  not  avail- 
able, but  if  they  were  it  is  evident  that  Duluth's  commerce',  despite  its 
greater  tonnage,  would  be  comparatively  insignificant  in  value. 

"Federal  government  reports  (see  Monthly  Summary  of  Commerce  and 
Finance)  give,  estimates  of  value  of  traffic  through  .the  Soo.  According 


to  these  reports,  the  value  of  unclassified  freight  passing  through  the  Soo 
developed  from  $18,744,600  in  1889  to  $170,227,650  in  1906.  The  value  of 
the  iron  ore  traffic  grew  from  $14,335,492  in  1889  to  $121,981,795  in  1906. 
In  other  words,  the  unclassified  freight  through  the  Soo  in  1906,  of  1,134,- 
851  net  tons,  was  worth  approximately  $48,000,000  more  than  the  35,357,042 
tons  of  iron  ore  passing  through  the  same  channel.  The  unclassified  freight 
passing  both  ways  through  the  Soo  is  about  the  same  in  volume  as  that 
entering  the  port  of  Chicago.  Against  the  1,134,850  tons  of  unclassified 
freight  traffic  through  the  Soo  in  1906,  Chicago  had  receipts  of  1,035,- 
317  tons.  For  the  years  1905  and  1907  Chicago's  receipts  of  unclassified 
freight  exceeded  the  Soo  traffic.  It  would  seem  to  be  a  good  guess  that  the 
unclassified  freight  received  at  Chicago  would  have  a  higher  average  value 
per  ton  than  that  passing  through  the  Soo. 

"Value  of  the  articles  handled,  as  well  as  tonnage,  must  be  taken  into 
consideration  in  measuring  the  value  of  traffic  to  a  community. 

' '  The  fruit  traffic  is  one  form  of  the  miscellaneous  cargo  business  that 
is  of  special  importance  to  Chicago.  In  most  instances  rail  carriage  is  con- 
sidered preferable  to  water  carriage,  unless  the  latter  offers  lower  rates. 
But  for  fruit,  water  carriage  is  best  in  cases  where  the  destination  can  be 
reached  by  a  night's  run.  The  lack  of  the  jarring  motion  of  the  train 
and  the  coolness  of  the  water  journey  cause  fruit  carried  by  boat  to  arrive 
in  better  condition.  The  fruit  belt  of  Michigan  is  just  about  a  night 's  run 
from  Chicago  and  fruit  gathered  in  the  late  afternoon  can  be  placed  on  the 
dock  in  Chicago  early  the  next  morning,  in  time  for  delivery  for  consump- 
tion the  same  day.  As  has  already  been  indicated,  in  the  discussion  of  the 
passenger  boat  business,  the  fruit  handling  facilities  in  this  port  leave 
much  to  be  desired." 


APPENDIX  A. 


Extract   from   Report  of  the   Street   Railway   Com- 
mission to  the  City  Council  of  Chicago, 
December,    1900. 


PUBLIC  CONTROL  AND  DURATION  OF  GRANTS. 

These  two  matters  should  be  considered  together  because  of  the  inti- 
mate relation  one  bears  to  the  other. 

The  primary  object  in  granting  to  private  corporations  the  right  to 
encumber  the  public  streets  with  car  tracks  is  to  secure  street  car  service. 
Unless  this  primary  object  is  accomplished  the  street  railway  policy  of  the 
city  must  be  said  to  be  a  failure,  no  matter  how  large  revenues  may  be 
secured  for  the  public  treasury,  nor  how  advantageous  for  the  city  the 
terms  of  a  franchise  grant  may  be  in  other  respects.  How  to  secure  ade- 
quate service  at  reasonable  rates  is,  therefore,  the  essence  of  the  street 
railway  problem.  All  other  considerations,  comparatively  speaking,  are  of 
secondary  importance. 

One  way  that  suggests  itself  of  securing  adequate  service  is  to  stipu 
late  for  it  in  the  franchise.  But  franchise  stipulations  of  this  kind  are  not 
self-executing.  It  is  one  thing  to  insert  in  a  grant  provisions  requirng 
certain  things  in  the  way  of  service.  It  is  quite  another  matter  actually 
to  get  the  things  done.  Moreover,  it  is  absolutely  impossible  to  make  stip- 
ulations today  that  will  fit  the  changed  conditions  of  tomorrow.  No  person 
is  wise  enough  to  formulate  for  insertion  into  a  street  railway  franchise 
that  is  to  be  interpreted  as  a  contract  all  the  stipulations  that  will  be 
necessary  to  insure  good  service  for  the  period,  say,  of  a  generation  for 
which  the  franchise  may  run.  In  fact,  the  more  a  street  railway  franchise 
partakes  of  the  nature  of  a  contract,  which  cannot  be  altered  in  any 
material  respect  except  with  the  consent  of  both  parties,  even  to  meet 
changes  in  conditions  which  could  not  be  foreseen  at  the  time  the  grant 
was  made,  the  less  satisfactory  is  it  certain  to  prove  in  operation  and  the 
more  is  it  likely  to  militate  against  healthy  and  progressive  development. 
On  the  other  hand,  the  more  such  a  franchise  partakes  of  the  nature  of  a 
mere  license,  being  subject  to  complete  regulation  and  control  by  the 
public  authorities  at  all  times,  the  better  for  the  public  at  large.  Mere 
property  interests  of  a  government,  like  the  property  interests  of  an  indi- 
vidual, may  properly  enough  be  contracted  away.  But  governing  authori- 

69 


ties  ought  not,  by  contract,  to  divest  themselves  of  governing  functions. 
Control  of  the  public  streets  and  of  the  public  means  of  transportation 
thereon,  is  a  governing  function  which  should,  so  far  as  possible,  be 
vested  in  the  proper  governing  authorities  at  all  times.  Such  control  should 
be  continuous  and  properly  ought  not  to  be  surrendered  beyond  recall, 
either  by  contract  or  in  any  other  manner.  But,  of  course,  it  is  surrendered 
to  a  greater  or  less  degree  by  the  ordinary  definite  term  street  railway 
grant  with  which  we  are  familiar.  The  present  widespread  dissatisfaction 
with  street  railway  management  in  private  hands,  it  would  seem,  may  in 
large  measure  fairly  be  attributed  to  the  fact  that  public  authorities  have 
not  retained  continuous  control,  as  they  should  have  done,  but  have  per- 
mitted themselves  to  be  divested  of  it  by  contract.  British  and  German 
cities  generally  have  a  reputation  for  marked  ability  in  making  contracts 
with  public  service  corporations,  and  some  of  the  agreements  made  by  those 
cities,  conferring  franchise  rights,  are  remarkable  for  the  ingenuity  and 
detail  with  which  they  seek  to  guard  against  future  contingencies.  But 
the  results  under  these  very  carefully  drawn  contracts  do  not  seem  to  be 
satisfactory,  because,  as  the  contract  periods  expire,  British  and  German 
cities  are  rapidly  adopting  the  policy  of  municipalization.  Some  contend 
that  the  careful  restrictions  of  the  contracts  made  by  British  and  German 
cities  tend  to  hamper  and  discourage  private  enterprise  and  thus  to  pre- 
clude satisfactory  street  railway  development  under  private  management. 
Whether  this  or  some  other  explanation  be  accepted  as  the  correct  one, 
the  fact  remains  that  the  system  of  regulation  by  contract  has  not  proven 
satisfactory  in  British  and  German  cities,  as  attested  by  the  fact  that  this 
system  is  being  abandoned  with  considerable  rapidity  for  the  policy  of 
municipalization.  Prof.  James,  of  the  University  of  Chicago,  who  has 
lately  returned  from  a  trip  of  investigation  of  German  cities,  tells  an 
incident  which  helps  to  an  understanding  of  the  movement  toward  munic- 
ipal ownership  in  Germany.  In  reply  to  a  question  as  to  the  reason  why 
the  City  of  Cologne  was  proceeding  to  take  over  its  tramways,  the  Mayor 
of  that  city  said  to  Prof.  James:  "We  are  taking  over  the  tramways 
because  it  was  found  impossible  thoroughly  to  safeguard  the  public  inter- 
ests under  any  contract  with  a  private  corporation  that  could  be  drawn." 

There  is  unquestionably  in  American  cities  a  strong  popular  trend 
in  the  direction  of  municipalization  of  street  railways.  It  seems  also  to 
be  unquestionable  that  the  growth  of  municipalization  sentiment  is  due 
in  large  measure  to  the  failure,  or  supposed  failure,  of  many  American 
cities  to  get  satisfactory  results  from  public  service  corporations  with 
which  they  have  attempted  to  deal  on  the  contract  basis. 

One  of  two  things  appears  to  be  inevitable.  Either  a  system  of  really 
effective  continuing  public  control  over  street  railways  must  be  developed 
or  street  railways  are  virtually  certain  to  be  municipalized  sooner  or  later. 
Manifestly,  therefore,  it  should  be  the  part  of  those  who  look  with  dis- 

70 


favor  upon  the  idea  of  municipalization  to  do  what  they  can  to  assist  in 
developing  a  system  of  control  over  street  railways  that  will  prove  satis- 
factory to  the  public. 

In  attempting  to  devise  a  system  of  effective  public  control,  the  impor- 
tant considerations  are:  (1)  That  adequate  powers  of  control  be  reserved 
to  the  governing  authorities  to  be  exercised  by  such  authorities  in  their 
discretion  at  any  time;  (2)  that  special  machinery  be  created  for  the  purpose 
of  insuring  the  intelligent  exercise  of  such  powers  of  control  in  the  interest 
of  the  public. 

As  has  been  said,  franchise  stipulations  designed  to  insure  adequate 
service  are  not  self  executing.  There  must  be  some  supervising  body, 
whose  special  business  it  is  to  see  that  the  things  stipulated  are  actually 
done.  Moreover,  specific  franchise  stipulations  cannot  possibly  cover  all 
points  in  relation  to  service  that  may  arise.  The  proper  governing  author- 
ities should  be  able  at  any  time  to  make  such  regulations,  or  to  order 
such  improvements  in  service,  as  the  needs  of  the  public  may  require. 
Therefore  broad  powers  of  control  should  be  reserved  to  the  governing 
authorities,  to  be  exercised  as  need  may  arise.  Section  6  of  the  proposed 
bill  aims  to  reserve  to  city  councils  broader  powers  of  control  than  are  now 
possessed.  If  this  bill  should  not  become  a  law  before  the  settlement  of  the 
pending  franchise-renewal  problem,  the  City  Council  by  all  means  ought 
specifically  to  reserve  such  powers  of  control  in  any  grant  that  may  be 
made. 

Having  reserved  the  right  of  control,  special  governmental  machinery 
for  the  exercise  of  such  right  must  be  devised  if  the  control  is  to  be 
really  effective  and  of  benefit  to  the  public.  Chicago  today  has  rights 
of  control  which  are  not  exercised  for  the  lack  of  any  supervising  body 
whose  special  business  it  is  to  recommend  regulations  for  the  improve- 
ment of  the  service  and  to  see  that  existing  regulations  are  properly 
enforced. 

What  should  this  machinery  be?  Two  plans  or  methods  are  naturally 
suggested  for  consideration.  One  is  the  creation  of  a  Commission  to  be 
entirely  independent  of  the  Council.  The  other  is  to  have  the  desired 
machinery  of  control  developed  within  the  Council.  The  Street  Eailway 
Commission  gives  its  approval  to  the  latter  plan. 

It  would  recommend  that  a  new  standing  committee  of  the  Council 
be  created,  to  be  known,  perhaps,  as  the  Committee  on  Local  Transporta- 
tion. This  committee  in  many  respects  might  well  be  modeled  after  the 
Track  Elevation  Committee.  It  should  not  be  large  in  number.  It  should 
have  regular  quarters  in  the  City  Hall,  which  should  at  all  times  during 
business  hours  be  open  for  receiving  complaints  concerning  service  from 
citizens,  and  for  the  imparting  of  information.  This  committee  should  have 
such  expert  and  clerical  assistants  as  might  be  required.  These  assistants 

71 


should  be  under  the  protection  of  the  civil  service  law,  to  the  end  that 
their  tenure  of  employment  should  be  permanent  or  during  good  behavior, 
in  order  that  the  city  may  have  the  benefit  of  their  experience  after  they 
have  become  familiar  with  the  problems  to  be  dealt  with.  The  most 
important  feature  of  this  plan  is  the  one  providing  that  the  Council, 
through  its  committee  on  this  subject,  should  have  at  its  service  a  per- 
manent force  of  experts 'to  advise  and  assist  it  in  dealing  with  the  various 
problems  of  local  transportation  as  they  may  arise. 

Naturally,  too,  this  same  committee,  with  its  expert  advisers  and  its 
mass  of  accumulated  information  and  experience,  is  the  one  to  which 
ordinances  conferring  the  right  to  construct  or  operate  street  railways 
would  be  referred.  This  committee,  acting  for  the  Council,  would  be  better 
qualified  to  conduct  the  preliminary  negotiations  with  a  private  corpora- 
tion over  franchise  terms  than  would  a  committee  that  is  only  occasionally 
called  upon  to  consider  street  railway  matters.  The  present  plan  of 
referring  street  railway  ordinances  to  one  of  three  committees  (Streets  and 
Alleys,  West,  North  or  South,  as  the  case  may  be),  according  to  the 
part  of  the  city  in  which  it  may  be  proposed  to  locate  the  road,  is  espe- 
cially objectionable  as  tending  to  foster  the  sectionalism  which  it  should 
be  the  object  of  a  well  considered  street  railway  policy  to  obliterate.  If 
the  street  railway  systems  of  the  city  ought  to  be  unified  as  far  as  possible, 
and  the  Commisison  believes  they  should  be,  the  City  Council  itself  ought 
to  take  the  first  step  in  that  direction,  by  having  one  committee  to  con- 
sider all  street  railway  matters,  rather  than  three  committees,  made  up  on 
strictly  sectional  lines,  as  is  the  case  at  present. 

All  Grants  Should  Expire  Together. 

In  order  for  the  city  to  control  the  situation  satisfactorily  it  must  be 
able  to  deal  with  the  problem  as  an  entirety  at  any  given  time,  which 
it  is  not  in  a  position  to  do  when  some  outstanding  grants  expire  at  one 
time  and  some  at  other  times.  It  ought  to  be  the  policy  of  the  city  in  the 
future,  therefore,  to  make  provision  to  have  all  grants  expire  at  the  same 
time.  This  is  a  matter  of  much  importance. 

Duration  of  Grants. 

It  was  said  at  the  opening  of  the  discussion  under  this  heading  that 
the  question  of  duration  of  grants  was  closely  related  to  the  problem  of 
public  control.  The  nature  of  that  relation  will  now  be  considered. 

As  has  already  been  stated,  efforts  to  control  public  service  corpora- 
tions through  contractual  agreements  generally  have  proven  unsatisfactory 
wherever  tried,  whether  in  this  country  or  in  Europe.  The  Commission, 
in  the  plan  recommended  for  the  reservation  of  broad  powers  of  control, 
hopes  to  secure  better  results  than  can  possibly  be  secured  through  con- 
tract stipulations  in  the  franchise  with  reference  to  service.  But  the 

72 


Commission  does  not  delude  itself  with  the  hope  that  the  results  under  .this 
plan  will  be  entirely  satisfactory  and  perhaps  they  may  not  in  practice 
prove  even  approximately  so.  It  is  difficult  to  compel  a  corporation  enjoy- 
ing definite  term  rights  in  the  public  streets  to  do  what  it  may  desire  for 
reasons  of  self-interest  not  to  do.  The  only  way  for  the  city  to  be  certain 
of  its  ability  to  exercise  complete  control  over  its  public  streets  and  over 
the  means  of  transportation  thereon  is  for  it  not  to  surrender  beyond 
recall  any  rights  of  use  or  of  occupation  in  such  streets.  The  city  can 
control  completely  only  when  it  is  in  a  position  to  terminate  at  any  time 
the  right  of  use  claimed  by  any  person  or  corporation  that  may  choose  to 
defy  the  will  of  the  city  -in  any  respect.  In  other  words,  the  grant 
terminable  at  any  time  at  the  will  of  the  city  authorities  is  the  only  kind 
under  which  the  city  can  be  sure  of  its  ability  to  dominate  the  situation 
at  all  times.  And  it  is  precisely  in  the  communities  where  that  form  of 
grant  obtains  that  the  best  results  generally  are  secured,  and  it  is  in  such 
communities  that  the  relation  between  the  corporations  and  the  public 
are  the  most  satisfactory.  We  refer  to  the  State  of  Massachusetts  and  to 
the  City  of  Washington,  D.  C. 

In  Massachusetts  street  railway  grants  do  not  run  for  any  definite 
period.  A  company  is  simply  granted  a  "  location, "  that  is,  it  is  per- 
mitted to  lay  its  tracks  in  a  street.  But  the  location  may  be  revoked  at 
any  time.  Until  recently  the  power  of  revocation  rested  absolutely  with 
the  local  authorities,  but  the  act  has  lately  been  amended  so  as  to  give 
the  right  of  appeal  to  certain  state  authorities  where  the  company  may 
feel  that  it  has  been  treated  unfairly.  But  the  principle  of  a  grant 
revocable  by  the  public  authorities  at  will  has  not  been  altered.  This 
power  of  revocation,  it  is  true,  has  seldom  been  used,  but  its  existence  has 
served  to  keep  the  corporations  on  their  good  behavior  at  all  times,  and 
to  keep  the  public  authorities  complete  masters  of  the  situation  at  all 
times.  Moreover,  capital  has  not  been  wanting  for  street  railway  enter- 
prises in  Massachusetts  under  these  conditions. 

The  only  careful  and  thorough-going  official  study  ever  made  in  this 
country  of  the  subject  of  the  proper  duration  of  street  railway  grants,  so 
far  as  this  Commission  is  aware,  was  that  made  by  a  Massachusetts  com- 
mittee, of  which  Mr.  Charles  Francis  Adams  was  chairman.  The  report 
of  that  committee,  which  was  submitted  to  the  legislature  of  Massachusetts 
in  February,  1898,  is  so  enlightening  and  instructive  that  lengthy  extracts 
from  it  are  appended  to  this  report.  The  Massachusetts  committee,  after 
an  examination  of  the  different  varieties  of  grant  in  use,  declared  in 
favor  of  the  continuation  of  the  Massachusetts  system  of  indefinite  term 
grants.  "In  theory,"  it  says,  "such  a  franchise  is  to  the  last  degree 
illogical."  Yet  it  cannot  be  said,  the  Commission  further  adds,  "that  the 
system  has  for  the  half  century  it  has  been  in  use  worked  otherwise  than 
on  the  whole  satisfactory."  On  the  other  hand,  the  term  franchise,  where- 

73 


ever  its  results  were  studied,  the  committee  says,  "has  been  productive  of 
dissention,  poor  service,  scandals  and  unhealthy  political  action. ' '  The 
committee  adds:  "There  is  probably  no  possible  system  productive  of 
only  good  results  and  in  no  respect  open  to  criticism;  but,  in  fairness,  the 
committee  found  itself  forced  to  conclude  that  the  Massachusetts  franchise, 
which  might,  perhaps,  not  improperly  be  termed  a  tenure  good  behavior, 
would  in  its  practical  results  compare  favorably  with  any.  Certainly  those 
results  are  as  immeasurably  as  they  are  undeniably  better  than  the  results 
as  yet  produced  in  Great  Britain." 

The  important  thing  in  the  testimony  of  the  Massachusetts  committee 
is  the  assertion  that  the  Massachusetts  system  of  indefinite  term  grants  has 
worked  well  in  practice.  It  is  important  to  know,  too,  that  the  system  is 
satisfactory  both  to  the  companies  and  to  the  municipalities,  for  at  the 
hearings  of  the  committee  neither  asked  for  any  change  in  the  form  of 
franchise  grant  in  this  respect,  except  that  the  companies  suggested  some 
"partial  measures  of  protection  against  possible  orders  of  sudden,  ill-con- 
sidered or  aggressive  revocation." 

Turning  to  the  City  of  Washington,  we  find  this  same  indefinite  term 
grant  in  use,  with  most  satisfactory  results.  Washington  is  one  of  the 
smaller  cities  of  the  country,  and  therefore  does  not  furnish  as  profitable 
a  field  of  operation  from  the  street  railway  manager's  point  of  view  as 
do  the  larger  centers  of  population  like  Chicago,  Philadelphia  or  New  York. 
Nevertheless,  Washington  has  the  best  street  railway  service  of  any  city 
in  the  country  and  it  has  led  most  other  cities  in  the  introduction  of 
improvements  in  service. 

In  Washington  franchise  grants  are  conferred  by  act  of  Congress,  and 
all  grants  are  subject  to  alteration,  amendment  or  repeal  at  any  time,  at 
the  will  of  Congress.  Under  the  power  thus  reserved  Congress  orders  such 
improvements  in  service  as  it  may  deem  desirable,  and  whenever  it  deems 
them  desirable,  and  the  orders  are  at  once  executed  without  parley  or 
litigation.  The  overhead  trolley  was  never  permitted  in  Washington.  When 
the  underground  trolley  was  shown  to  be  feasible,  Congress  passed  an  act 
reading  in  part  as  follows: 

"That  the  said  Metropolitan  Eailroad  Company  be,  and  the  same  is 
hereby  authorized,  empowered  and  required  to  equip  and  operate  the  lines 
of  its  cars  upon  and  along  *  *  *  with  an  underground  electric  system 
for  the  propulsion  of  such  cars." 

Under  this  order  Washington  was  the  first  city  in  the  country  to  secure 
the  underground  trolley. 

Under  the  reserved  power  to  alter,  amend  or  repeal  grants  at  will 
Congress  has  required  different  companies  to  make  arrangements  for  issuing 
transfers  from  the  line  of  one  company  to  those  of  another,  and  it  has  also 

74 


required   different   companies   to  use    certain  tracks  in   common  where  ±he 
public  interests  would  be  served  by  such  an  arrangement. 

In  framing  franchise  legislation  for  Porto  Eico  Congress  made  pro- 
vision for  this  same  form  of  indefinite  term  grant. 

In  view  of  the  fact  that  the  indefinite  term  franchise  has  worked  so 
well  in  practice,  it  may  be  in  order  to  question  the  statement  of  the  Massa- 
chusetts committee  that  found  in  favor  of  this  form  of  grant  that  "such 
a  franchise  is  to  the  last  degree  illogical. ' '  Things  that  are  illogical 
usually  do  not  work  well,  in  the  long  run  at  least.  The  fact  that  the 
indefinite  term  franchise  has  actually  produced  such  satisfactory  results  in 
practice  must  lead  one  to  inquire  if  it  is  not  really  correct  in  principle, 
despite  its  seeming  illogical  character. 

As  the  Massachusetts  committee  very  clearly  and  very  correctly  points 
out,  the  street  car,  in  evolutionary  development,  is  "  nothing  more  nor  less 
than  an  improved  omnibus,  and  the  tramway  a  special  feature  in  the  pave- 
ment of  the  public  way;  a  feature  adapted,  it  is  true,  to  the  car's  special 
use,  but  not  necessarily  excluding  from  general  use  the  portion  of  the  street 
in  which  it  is  laid.  This  is  all  the  street  railway  was  fifty  years  ago,  when 
first  laid;  it  is  all  it  is  now — an  improved  line  of  omnibuses,  running  over 
a  special  pavement.  If  this  fact  be  firmly  grasped  and  borne  constantly 
in  mind,  the  discussion,  and  the  principles  underlying  it,  are  greatly  sim- 
plified. The  analogy  throughout  is  with  the  omnibus  line,  and  not  with 
the  railroad  train;  with  the  public  thoroughfare,  and  not  with  the  private 
right-of-way.  Upon  this  distinction,  indeed,  all  the  questions  now  to  be 
discussed,  whether  of  taxation  or  of  franchise  privilege  and  obligation,  will 
be  found  to  turn. " 

Now,  the  omnibus  is  operated  under  a  license  that  gives  no  right  as 
against  the  authority  granting  the  license  that  cannot  be  altered  or  taken 
away  at  any  time.  All  would  concede  the  unwisdom  and  impolicy  of 
making  the  license  for  the  omnibus  a  binding  contract  for  a  definite  period 
of  time  that  could  not  be  altered  or  revoked  by  the  granting  authority,  no 
matter  how  conditions  might  change,  and  no  matter  how  arbitrary  and  over- 
bearing the  manager  of  the  omnibus  line  might  be  in  his  dealings  with 
the  public.  And  yet  the  indefinite  term  grant  or  revocable  license  for  the 
street  car,  which  is  only  an  improved  omnibus,  is  conceived  to  be  illogical. 
We  cannot  think  that  it  is  so.  On  the  contrary,  the  indefinite  term  grant 
is  nearer  in  accord  with  the  correct  principle  than  is  the  term  grant. 

Because  of  the  great  outlay  involved  in  establishing  a  street  railway 
system,  it  is  said,  the  owners  of  such  property  ought  to  have  some  assur- 
ance that  their  property  value  will  not  be  destroyed  by  some  hasty  act  of 
revocation.  And  so  they  ought.  But  the  assurance  should  be  that,  if  their 
rights  to  use  the  street  be  revoked,  their  property  suitable  to  and  used  for 
street  railway  purposes  should  be  taken  off  their  hands  at  a  fair  valuation; 

75 


not  that  they  should  be  privileged  to  remain  in  undisputed  possession  of 
the  public  streets  for  a  definite  period  of  time,  whether  they  serve  the 
public  well  or  ill. 

The  Street  Eailway  Commission  believes  that  the  definite  term  grant, 
whatever  its  duration,  is  open  to  serious  objections.  It  is  of  opinion  that  a 
grant  of  indefinite  duration  but  subject  to  termination  at  any  time  upon  cer- 
tain conditions,  one  of  which  should  be  the  taking  of  the  property  of  the 
grantee  at  a  fair  valuation,  would  be  productive  of  much  better  results.  But 
this  idea  is  so  much  at  variance  with  commonly  accepted  views  in  this  state 
concerning  franchise  grants,  and  would  mark  such  a  radical  departure  from 
present  policy,  that  the  Commission  has  hesitated  to  do  more  than  to  com- 
mend the  idea  to  public  favor.  It  has  not  sought  to  incorporate  the  idea 
into  the  draft  of  the  bill  herewith  submitted.  As  a  modification  of  this 
idea,  however,  and  as  a  means  of  controlling  the  situation  in  the  interest 
of  the  public,  the  Commission  would  recommend  that  grants  hereafter  made 
contain  a  provision  giving  the  city  the  right  to  terminate  the  grant  and 
to  take  over  the  property  at  an  appraised  valuation  at  the  end  of  every 
five  year  period.  This  provision  should  be  inserted  primarily  with  a  view 
to  its  use  only  in  case  public  dissatisfaction  with  service  and  conditions 
should  be  so  great  as  to  make  a  change  in  management  imperative.  With 
such  a  provision  in  the  grant  there  is  much  less  likelihood  that  there  would 
be  cause  for  public  dissatisfaction. 


76 


APPENDIX  B. 


Extracts  from  the  Report  of  the  Metropolitan  Im- 
provements Commission  of  1909,  created  to 
study  the  Boston  situation. 


Confusion  or  rigidity  of  movement  in  a  terminal  situation  will  produce 
the  same  confusion  and  absence  of  flexibility  throughout  the  entire  trans- 
portation line  using  that  terminal. 

*  *  *  *  *  *  * 

There  has  been  no  united  effort  or  plan  for  raising  the  freight  termi- 
nals to  the  modern  standard  of  efficiency  or  economy.  They  require  radical 
improvement  if  the  future  commercial  opportunities  of  Boston  are  to  be  met. 
The  water  terminals  are  mainly  owned  and  controlled  by  the  railroads  and 
other  transportation  lines.  They  are  already  becoming  congested  to  the 
point  of  interfering  with  the  despatch  and  economy  of  business,  and  are 
in  no  way  comparable  in  their  arrangements  and  facilities  with  those  of 
many  other  cities  of  less  commercial  importance.  Whether  these  deficiencies 
in  terminal  facilities  have  already  retarded  the  commercial  growth  of  the 
city  is  a  question  which  may  not  reward  discussion,  but  certain  it  is  that 
the  existing  railroad  and  harbor  terminals  as  now  arranged  and  admin- 
istered offer  slender  encouragement  to  the  legitimate  aspirations  for  the 
future. 

Greater  Boston  as  a  Terminal  District. 

Greater  Boston  being  in  effect  one  terminal  district;  the  proper  improve- 
ment and  development  of  its  terminal  facilities  should  be  treated  as  a 
single  problem.  The  present  arrangement  of  separate  and  independent 
freight  terminals  for  the  several  railroads  and  lines  of  water  transporta- 
tion should  be  abandoned,  and  in  its  place  there  should  be  adopted  a  com- 
prehensive plan  for  a  flexible  and  efficient  system  of  interchange  terminals, 
whereby  commodities,  whether  in  carload  or  cargo  bulk,  or  in  lesser  lots, 
may  be  delivered  and  transshipped  from  railroad  to  railroad,  or  from  land 
to  water,  or  vice  versa,  and  distributed  among  consignees,  with  the  highest 
attainable  expedition  and  economy.  The  establishment  of  such  a  system  of 
interchange  terminals  is  of  the  greatest  importance  to  Boston.  The  con- 
trolling features  of  such  a  system  should  be  direct  and  effective  connec- 
tion between  all  lines  of  railroad  entering  the  city  and  every  portion  of 

77 


the  terminal  system,  as  well  as   access  to   and  use  of  the  system  and  its 
facilities  by  every  railroad  on  equal  terms  for  like  service. 

Such  a  system  necessarily  involves  some  well-considered  plan  of  water- 
terminal  improvement.  Boston  for  many  years  has  been  without  any 
definite  plan  for  harbor  development  or  for  the  correlation  and  efficient 
connection  of  its  terminals.  With  a  few  notable  exceptions,  the  wharves 
and  docks  of  Boston  are  of  insufficient  length  to  accommodate  steamships 
of  the  size  and  type  now  coming  into  general  use.  The  wharf  sheds  are 
mostly  of  wooden  construction,  inviting  frequent  conflagration.  Not  only 
should  the  docks  be  longer  and  wider,  but  the  piers  should  be  wide  enough 
to  afford  ample  room  for  streets,  warehouses  or  freight  sheds  and  railroad 
tracks.  It  appears  very  probable  that  between  the  great  ports  North 
Atlantic  business  will  soon  be  done  almost  entirely  by  steamships  of  the 
combination  type — large  passenger  steamers  carrying  freight.  Docks  that 
are  to  be  built  should  be  arranged  to  a  considerable  extent  for  the  accom- 
modation of  passenger  business  as  well  as  freight  business.  The  very  fact 
that  so  much  passenger  business  has  heretofore  come  to  Boston,  despite 
such  inadequate  facilities,  demonstrates  that  better  facilities  are  demanded, 
and  that  the  passenger  business  under  reasonably  favorable  conditions  may 
be  expected  to  show  a  large  increase.  It  is  certainly  a  matter  of  congratula- 
tion and  encouragement  that  the  shipping  of  Boston  harbor  has  so  well 
maintained  itself  with  so  little  consideration  or  assistance  from  the  public. 
The  persistence  of  business  under  disadvantageous  terminal  conditions  leads 
to  the  reasonable  conviction  that  with  advanced  facilities  the  port  of 
Boston  has  a  promising  future.  But  harbor  terminal  facilities  must  be 
furnished  through  private  enterprise  or  by  the  commonwealth  or  munici- 
pality, or  by  a  combination  of  these  authorities.  In  view  of  the  lack  of 
co-operation  on  the  part  of  the  public  authorities,  the  railroads  are  to 
be  commended  for  their  enterprise,  not  only  in  furnishing  dock  and  termi- 
nal facilities,  but  in  actively  encouraging  connecting  steamship  lines.  With- 
out this  the  port  would  long  since  have  come  to  a  commercial  standstill. 

The  federal  government  has  made  it  an  invariable  rule  to  expend  noth- 
ing in  the  development  of  terminals  or  harbor  facilities.  It  has,  however, 
been  very  generous  in  improving  the  channels  and  waterways  of  the  harbor, 
and  has  made  large  expenditures  for  that  purpose.  In  addition  to  this, 
the  commonwealth  between  1870  and  1908  inclusive  expended  $4,781,435.15 
in  harbor  improvements,  represented  mainly  by  dredging  and  related  work. 
The  City  of  Boston  itself,  on  the  other  hand,  has  for  many  years  done  noth- 
ing worthy  of  note  in  developing  its  harbor.  Added  to  this  comparative 
neglect  on  the  part  of  the  city,  many  undertakings,  private  as  well  as  public, 
have  been  established  on  the  water  front  of  the  harbor  which  may  seriously 
hamper  and  restrict  its  complete  or  ideal  treatment  in  the  future.  Defective 
facilities  and  disordered  conditions  have  been  allowed  to  remain  unrem- 
edied,  although  their  injurious  effect  upon  Boston's  commerce  has  been 
repeatedly  recognized  and  brought  to  the  public  attention. 

78 


The  progressive  ports  of  the  world  have  adopted  the  contrary  policy, 
and  it  is  now  becoming  generally  recognized  that  the  wise  administration 
of  any  port  requires  that  it  shall  plan  its  facilities  and  arrangements 
ahead  of  present  demands,  and  thus  be  prepared  to  meet  whatever  the 
immediate  future  may  require. 

Less  important  commercially  than  the  improvement  of  freight  and 
water  terminals,  but  of  prime  consequence  to  the  welfare  and  safety  of 
the  people,  is  the  early  adaptation,  of  the  railroad  passenger  terminals 
in  Boston  to  modern  requirements.  The  geographical  position  of  Boston, 
its  congested  territory  and  the  habits  of  its  people  make  it  the  one  city 
above  all  others  which  requires  well-ordered,  rapid  and  comfortable  subur- 
ban transportation.  The  electrification  of  all  railroad  passenger  lines  in 
the  Metropolitan  District  within  the  next  few  years  is  highly  probable. 
Changes  in  present  terminal  structures  and  arrangements — whether  with 
reference  to  freight  or  passenger  terminals — should  therefore  be  carefully 
studied,  with  due  regard  to  that  probable  and  far-reaching  change  in  trac- 
tion methods  and  its  inevitable  effect  upon  terminal  problems. 

Freight  Terminals  Radically  Reformed. 

The  first  and  most  important  step  of  progress  must  be  a  general 
recognition  by  the  public  that  these  matters  are  of  vital  interest,  and 
that  they  are  to  be  dealt  with  as  different  but  essential  features  of  the 
one  problem  of  transportation  as  applied  to  a  commercial  and  industrial 
center.  A  complete  and  comprehensive  plan  of  improvement  should  be 
worked  out  to  a  finality,  in  order  that  when  the  plan  is  at  length  adopted 
there  shall  be  no  doubt  of  its  effectiveness  or  feasibility.  The  studies  of 
the  commission  have  necessarily  been  preliminary;  no  detailed  engineering 
plans  or  estimates  of  cost  of  suggested  improvements  and  developments 
have  been  made.  The  many  lines  of  investigation  entrusted  to  the  com 
mission  have  not  left  it  sufficient  time  or  money  for  the  preparation  of 
such  plans  or  estimates.  Final  studies  should  be  along  the  broadest  and 
most  intelligent  lines,  without  restriction  as  to  any  reasonable  expense. 
The  essential  thing  is  to  have  a  plan  that  is  known  to  be  right,  and  then 
to  follow  it  without  substantial  deviation  as  soon  as  conditions,  financial 
and  otherwise,  permit.  The  main  purpose  is  to  secure  an  adequate  ulti- 
mate development  of  terminal  facilities  for  the  transfer,  delivery  and 
distribution  of  freight,  and  the  requisite  improvements  in  the  Boston 
passenger  terminals. 


How  to  Achieve  the  Needed  Improvements. 

It  is  %very  important,  nevertheless,  that  the  public  should  reach  some 
definite  and  comprehensive  plan  with  reference  to  all  these  desirable 
railroad,  terminal  and  harbor  developments,  in  order  that  they  may  be 

79 


carried  forward  without  unnecessary  delay.  To  arrive  at  such  a  plan, 
as  a  completed  study,  will  certainly  require  very  considerable  time  and 
expense,  involving  engineering  details  and  an  exhaustive  examination  with 
reference  to  the  matter  of  cost.  The  commission  recommends  that  the 
work  of  formulating  such  a  plan  for  ultimate  presentation  to  the  legisla- 
ture be  placed  in  charge  of  a  commission  to  be  appointed  by  the  Governor 
-and  Council,  with  no  other  duty  than  the  working  out  of  this  great  trans- 
portation problem,  and  that  no  reasonable  expense  be  spared  to  have 
the  studies  of  that  commission  so  final  and  complete  as  to  deserve  and 
secure  the  fullest  public  approval. 

When,  at  length,  after  the  final  report  of  such  commission,  the  time 
shall  have  arrived  for  definite  action  in  that  regard,  the  equipment  of 
Boston  with  a  proper  system  of  freight  and  water  terminals,  with  modern 
warehouses  and  port  facilities,  as  well  as  the  reformation  of  its  pas- 
senger terminals,  should  be  worked  out  and  completed  under  public  direc- 
tion. There  is  probably  no  practicable  alternative.  Assuming  that  such 
improvements  could  be  carried  out  by  a  company  projected  purely  as  a 
private  enterprise,  the  transfer  and  switching  charges  which  a  modern 
terminal  system  is  designated  to  eliminate  would  necessarily  be  continued 
by  such  a  company  as  its  only  source  of  revenue,  and  might  thereby 
become  perpetuated.  The  exaction  of  such  charges  from  the  railroads 
would  inevitably  evoke  their  lasting  opposition.  On  the  other  hand,  in 
so  far-reaching  a  matter,  action  by  the  railroads  themselves  on  their  own 
initiative,  or  effective  co-operation  among  them,  is  extremely  unlikely. 
This  is  especially  true  when  there  are  so  many  companies  owning  or  oper- 
ating railroads  entering  the  city.  Public  direction  with  railroad  co-opera- 
tion offers  the  most  promising  solution  of  the  problem.  But  such  a  plan 
should  be,,  and  if  it  is  to  succeed  must  be,  made  reasonably  attractive  to 
the  railroads.  No  effort  should  be  spared  to  secure  their  full  co-operation 
with  the  public  on  equitable  terms.  It  is  eminently  fit  that  so  compre- 
hensive a  proposition  as  that  of  terminal  and  harbor  development  should 
be  carried  out  by  the  united  action  of  the  public  authorities  and  the 
railroads.  They  would  enjoy  in  common  the  benefits  of  an  increasing 

,  commerce  and  business,  with  the  resulting  growth  in  population  and  in 
wealth.  They  should,  therefore,  participate  in  bringing  these  things  to 

.  pass. 

Bearing  this  view  of  the  matter  in  mind,  the  most  feasible  method  of 
bringing  the  present  inadequate  and  ill-connected  terminals  of  Boston 
intq.  one  great  modern  terminal  system  would  appear  to  be  through  a 
terminal  company,  to  be  organized  and  promoted  by  the  joint  action  of 
the  public  authorities  and  all  the  railroad  companies.  The  reconstruction 
of  the  passenger  terminals  and  their  connection  by  the  proposed  tunnel, 
upon  the  adoption  of  the  above  or  any  similar  plan,  should  be  carried 

' 

out    chrough    the    instrumentality    of    the    same    terminal    company.      Such 

80 


terminal  company  should  acquire  the  terminal  properties  and  sites"  for 
terminals  now  owned  by  the  railroads,  with  all  connecting  track  lines,  so 
far  as  they  would  form  an  essential  or  natural  part  of  the  proposed  termi- 
nal system. 

Whatever  plan  may  be  adopted  for  acquiring  and  paying  for  these 
properties,  its  one  paramount  requisite  is  that  it  shall  be  perfectly  just 
to  railroads  and  public  alike.  If  a  basis  of  acquisition  could  be  formulated 
agreeable  to  the  railroads,  payment  for  the  properties  acquired  from  them 
might  be  made  in  stock  or  bonds  of  the  terminal  company,  or  partly  in 
each  class  of  securities.  All  or  a  portion  of  the  bonds  of  the  terminal 
company,  as  the  case  might  be,  could  be  issued  for  additional  terminal 
properties  and  for  improvements,  construction  and  developments.  To  secure 
the  advantage  of  lower  interest  rates,  and  in  recognition  of  its  own  par- 
ticipation in  the  whole  proceeding,  the  Commonwealth  might  very  prop- 
erly guarantee  the  payment  of  the  bonds  of  the  terminal  company,  the 
mortgage  securing  such  bonds  to  contain  proper  sinking-fund  requirements. 
Following  various  precedents,  the  bonds  might  with  equal  propriety  be 
exempted  from  taxation  and  made  a  savings-bank  investment.  The  man- 
agement of  the  terminal  company  should  be  by  the  railroads  and  the  Com- 
monwealth jointly,  each  electing  a  definite  proportion  of  its  board  of 
directors.  Terminal  operations  would  thus  be  controlled  and  managed  in  a 
way  that  would  amply  conserve  railroad  interests  and  at  the  same  time 
afford  a  proper  measure  of  protection  to  the  public.  With  appropriate 
legislation  there  would  be  110  legal  obstacle  in  the  way  of  such  joint  action 
by  the  public  authorities  and  the  railroads.  Moreover,  there  ought  to  be 
no  reason  why  this  should  not  be  entirely  practicable. 

******* 

The  commission  has  sought  to  make  it  clear  that  the  water  front  of 
the  Metropolitan  District  affords  the  highest  possible  opportunity  and 
promise  for  commercial  and  industrial  development.  It  follows  as  a  corol- 
lary that  the  source  of  such  opportunities  should  be  in  every  way  properly 
safe-guarded.  Nothing  further  should  be  done  by  the  public  in  the  way  of 
takings  for  purposes  or  otherwise  which  will  divert  any  portion  of 
this  great  water  front  from  its  potential  use  for  commerce  and  industry. 
The  commission  has  recommended  the  permanent  reservation  of  certain 
areas  within  Boston  harbor  for  the  location  of  a  future  system  of  docks. 
It  is  a  matter  of  regret  that  the  most  available  industrial  sites  along 
the  water  front  cannot  be  similarly  reserved. 


SI 


SYRACUSE,  -  N.Y. 

PAT.  JAN.  21,  I8O8 


351781 


UNIVERSITY  OF  CALIFOENIA   LIBEAEY 
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MAY  5  1917 


